Centre issues bonds to meet shortfall in 2 UTI schemes

The Central government announced the issue of bonds to the erstwhile Unit Trust of India (UTI) in order to meet the latter's shortfall on two of its assured returns schemes.

The two assured returns schemes - MIP 99 (II) and MIP 2000 "" will be foreclosed on July 31.

Sometimes the government funds the shortfall of the fund in the form of cash support and sometimes through the issue of bonds.

This time around the government has issued 6.1 per cent UTI Bonds 2011, which will be sold by UTI to meet the shortfall between the redemption amount due and the corpus with the scheme. The notified amount of the bonds is Rs 362 crore.

"The government has announced the issue of 6.1 percent UTI bonds 2011 for a notified amount of Rs 362 crore," a government statement said.

UTI Mutual Fund executive director D S R Murthy said the actual shortfall would be known only on the closing date of the schemes. If the shortfall exceeds or falls short of the notified amount, adjustments would be made accordingly.

UTI has the freedom to sell the bonds according to its needs, Murthy said.

There are three more such assured returns schemes, which will be allowed to run their course or can be foreclosed by UTI depending on the market conditions.

The monthly income schemes have a high content of equity in them and UTI has been churning the portfolio to maximise returns for its shareholders.