``Things are now normal at the US-64 counter,'' said an UTI official, allaying fears of any pressure on the scheme. UTI officials are expecting fresh sales of US-64 (which has a corpus of nearly Rs 20,000 crore) to pick up in the next week. ``Reports from all UTI centres in India state that the number of people coming for repurchase now are much less. There is nothing abnormal with the scheme. Vested interests are spreading various rumours,'' he said. It may be recalled that UTI witnessed redemption on Monday amidst reports that the net asset value of the scheme had eroded and the trust would be reducing its equity exposure. However, UTI chairman P S Subramanyam later denied reports about reduction in equityexposure.

Meanwhile, it is learnt that banks are planning to cut interest rates on domestic deposits across all maturities in a bid to discourage US-64 holders to park their funds with them. Some investors have put money in fixed deposits after redeeming their US-64 units. ``We will bring down the rates on our short-term deposits by 50 basis points,'' said an ICICI Bank official. According to him, banks would not turn off depositors from putting in money in term deposits, but they will be offering lower rates. ``The interest rate on deposits maturing below three months with is currently pegged at 7 per cent will be cut by 50 basis points to 6.5 per cent,'' said a bank official.

UTI has also entered into a "strategic alliance" with the State Bank of India to generate liquidity which, in turn, is pumped into the equity market. The largest commercial bank in the country has also been in the market over the past few days, actively buying stocks. According to the "arrangement", UTI has been selling Governmentof India securities and public sector bonds to the SBI through "direct deals" to tide over its short-term liquidity crisis. The funds generated through the selling of government securities is being used to buy stocks from the market as well as to meet the redemption pressure on US-64.

SBI has bought stocks from the secondary market this week. Sources in SBI said the bank has not lent any funds to the mutual funds behemoth but entered into "normal trading transactions" with it. UTI has been selling PSU bonds and securities to the SBI to generate liquidity which is being used to meet "normal" redemptions of the US-64 as well as pump in in the stock markets.