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UTI-I to get grant to close 3 plans
March 03, 2005 14:11 IST
The government will provide Rs 1,200 crore (Rs 12 billion) to UTI-I in the next fiscal to enable closure of three assured return schemes.
"The budget allocation is for meeting some shortfall UTI-I faces in fulfilling its obligation in the three remaining assured return schemes," S B Mathur, administrator of UTI-I said.
He said the assistance would go to the specified undertaking of Unit Trust of India or UTI-I during 2005-06. UTI-I is being provided the funds under the head of non-plan expenditure.
UTI-I still has assets worth over Rs 10,000 crore (Rs 100 billion) mostly in equities, Mathur said, adding the fund will offload the shares in the market to recover some of the losses.
So far, the government has provided Rs 12,771 crore( Rs 127.71 billion) for US-64 and other assured return schemes by way of cash and issuance of bonds. Against this, the enhancement in the SUS-99 portfolio is only about Rs 2,900 crore (Rs 29 billion).
In addition to issue of cash and bonds, government has also guaranteed bonds issued by SUUTI worth Rs 8,470 crore (Rs 84.7 billion) for US-64 investors and Rs 6,159 crore (Rs 61.59 billion) for other assured return schemes.
The centre had paid small investors owning up to 5,000 units at Rs 12 per unit of US-64, whose net asset value was only Rs 6.50. Investors were also given the option of tax-free bonds carrying a coupon rate higher than the prevailing market rate.
Till now, the government has shelled out over Rs 6,000 crore (Rs 60 billion) for UTI bailout with the intention of helping the small investors and reviving the capital market.