The DRF is being used by the Trust to meet any shortfall in its assured income schemes. In fact, for the Unit Scheme-64, the UTI had started dipping into the development reserve funds way back in 1996 to pay dividends due to sagging stock markets, say sources.

A committee, set by the finance ministry to restructure the UTI, is currently debating on when the UTI should disclose its net asset value of its flagship scheme Unit Scheme-64. Some members of the committee, headed by HDFC chairman, Deepak Parikh, are of the view that UTI should disclose NAV of US-64 as early as next fiscal. The committee met in Mumbai on Wednesday. The committee members are meeting in Chennai next week to finalise its report.

Members were of the opinion that Trust should be asked to restructure itsUS-64 portfolio in favour of more debt rather than equity.

The committee headed by Deepak Parikh is expected to submit its report to the government within the December 15 deadline. The other members of the committee are: chairman of State Bank, M S Verma, RBI deputy governor, Jagdish Capoor, finance ministry nominee, Arvind Virmani, former IDBI chairman and director UTI, S H Khan and chartered accountant, Rajendra Chitale.

UTI officials say the members of the high level committee want the UTI to auction its equity holdings in major companies to highest bidder in order to raise funds for its US-64 scheme. Already many promoters, including the Tata Sons, have approached UTI to buy-back their shares in order to increase their holdings after Sebi relaxed its creeping acquisition limit from two per cent to five.

The restructuring of the US-64 portfolio would be done after giving the small investors an option to exit, say committee members. Already many small investors and corporate houses have made an exitfrom the scheme. The government will ensure that if there is any shortfall in the scheme, it will step in to bail out UTI by way of a stand-by facility, sources said.

Besides in order to arrest any panic in the stock market, the restructuring of US-64 would be done gradually in the next two years while the Trust would be bought under some regulatory framework as suggested by the Vaghul and Narasimham committee, sources add.

As of now, despite managing a staggering sum of Rs 75,000 crore, the UTI is not coming under any regulatory framework. As the faith of small investors in the Trust is extremely high, the committee is of the view that the Government of India must provide every possible support to the scheme similar to the bailout package devised for Indian Bank.