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Tax-free bonds for UTI schemes likely
BS Economy Bureau in New Delhi |
July 28, 2003 11:14 IST
The government is likely to issue bonds guaranteed by it and carrying 6.75 per cent tax-free returns to investors of the seven assured return schemes of UTI-I that are being foreclosed. The bonds will be similar to those issued for US-64.
For the MIP 98 (III) scheme, maturing on August 31, the government is planning to allow unitholders to accept the redemption amount either in cash or in bonds. The maturity value of this scheme is estimated at Rs 1,611 crore (Rs 16.11 billion).
The government proposes to foreclose seven UTI schemes -- MIP 99, MIP 98 (V), CCGF 86, RUP II, CGGF 99, RUP 99 and BGV MIP. The maturity value of these schemes is estimated at over Rs 30,000 crore (Rs 300 billion).
The finance ministry had projected a shortfall of around Rs 17,000 crore (Rs 170 billion) in an assessment done by it last year. Of the seven schemes, MIP 99 and MIP 98 (V) are due for redemption in 2004-05. CCGF 86, RUP II, CGGF 99, RUP 99 are long-term schemes with maturity ranging between 15 years and 20 years.
The government has also reset dividends on five MIP schemes, with capital assured at maturity, that are maturing between October 2004 and March 2006.
By issuing bonds the government will defer the liabilities it faces in these schemes as the alignment is not in sync with the prevailing rate of returns.