7 UTI-I schemes face Rs 4,500 crore shortfall

The government's liability in the seven assured-return schemes proposed to be foreclosed by UTI-I is expected to be about Rs 4,500 crore, based on their shortfall on October 29, 2002.

According to finance ministry sources, the UTI-I advisory board, chaired by M Damodaran, will meet on August 6 to firm up the options to be made available to the investors in the seven schemes to be foreclosed.

The sources said the cumulative shortfall in the two monthly income plans to be foreclosed "" MIP 99 and MIP 98 (V) "" stood at Rs 1,033 crore in the end of October last year. Both the schemes will mature in 2004-05.

Of the remaining five long-term assured schemes, the shortfall in CGGF 86 was the highest at Rs 3,058 crore in October 2002, the sources said.

The CGGF 86 is due to mature on July 1, 2018. The shortfall in four other schemes "" RUP-II, CGGF 99, RUP-99 and BGV MIP ""stood at Rs 403 crore, Rs 150 crore, Rs 24 crore and Rs 57 lakh, respectively, on October 29, 2002.

Finance ministry sources said investors in the assured-returns schemes being foreclosed would be provided with two options: Either to invest in bonds, or accept cash.

The bond option will be similar to that provided to Unit Scheme-64 (US-64) investors. The advisory board's meeting on August 6 will decide on the interest rate to be offered on the bonds. Besides Damodaran, the other members in the board include Additional Secretary in the Finance Ministry D Swarup and Joint Secretary U K Sinha.

US-64 investors were given the option of investing in government-guaranteed bonds carrying 6.75 per cent tax-free returns.

The bonds had a five-year tenure and offered 25 basis points more in interest than the 6.5 per cent tax-free government of India savings bond (Relief Bonds).

The sources said investors of assured-returns schemes would also be offered a similar interest rate on the bond option.