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April 6, 2002 | 1205 IST
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Money > Business Headlines > Report April 6, 2002 | 1205 IST |
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UTI plans alternative for MIP 97BS Markets Bureau The Unit Trust of India has moved the Securities and Exchange Board of India seeking clearance to launch a new scheme with a monthly income option exclusively for investors of its Monthly Income Plan (MIP) 1997, which is due to mature on April 30, 2002. If Sebi approves, investors in MIP 97 will be offered the option to park their money in the new scheme. The objective behind the move is to buy time as UTI is suffering from a liquidity crisis. In a letter to unit-holders, UTI has said it is awaiting Sebi's approval for the launch of the new scheme. So far, Sebi has not cleared any scheme from UTI, including its open-ended monthly income plan. UTI is expected to take a big hit upon the maturity of MIP 97, which has a corpus of Rs 16 billion. The net asset value of the scheme stood at Rs 5.79 under the monthly income option, and Rs 6.39 under the cumulative option. The scheme offered an assured return of 14 per cent under the monthly option and 14.95 per cent under the cumulative one. It is estimated UTI will take a hit of Rs 8 billion. R Rangarajan, fund manager in charge of monthly income plans in UTI, said, "Any shortfall in the scheme will be bridged from the development reserve fund." The monthly income plans are assured-return schemes, which means UTI is committed to paying the assured sum, and any shortfall will be met by the government. UTI has already asked the government to bail it out, apprehending a shortfall at the time of redemption. With six schemes, including five monthly income plans, due for redemption this year, the shortfall could run into Rs 20 billion, depending on the condition of the market. Apart from MIP 95 (cumulative), with its NAV of Rs 16, the NAVs of the other monthly income plans are all ruling below the par value of Rs 10. UTI has started redemption proceedings of MIP 92 at Rs 14.87. This scheme matured on March 31, 2002. The finance ministry has convened a meeting with the UTI brass on April 11 to draw up a strategy to meet the redemption pressure. Economic affairs secretary CM Vasudev will chair the meeting. Powered by ALSO READ:
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