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Bailout package likely for UTI

Beleagured Unit Trust of India on Thursday moved a step forward to work out a bailout package to meet the liquidity needs of two of its schemes maturing by June end with its chairman M Damadoran meeting Finance Minister Yashwant Sinha in New Delhi for this purpose.

The two UTI schemes that are maturing by June end are the monthly income plan (MIP) 1997 and Institutional Investors Special unit scheme. The combined shortfall in these two schemes is estimated at Rs 10.50 billion.

After the meeting, Sinha said: "Nothing has been finalised as yet." But sources said modalities for the bailout would be worked out ahead of the maturity of the schemes this month end.

UTI has also been asked to examine other options, which included drawdown of the development reserve fund, support from sponsors, termination of corporate term loans and liquidation of debentures.

The government is in the process of finding a long-term solution to ailing UTI by restructuring the mutual fund. The first step toward this is to amend the UTI Act, which is expected to come up during the monsoon session of Parliament.

The chairman has already announced that all the new schemes will be net asset value based and that there would be assured return schemes hereafter.

As there were millions of small investors in UTI schemes, the sources said the government would take all steps to protect their interests.

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