Government is planning to foreclose seven major assured return schemes of the Unit Trust of India, including the 'Children Growth Fund'.
Market regulator SEBI's approval has been sought - and is expected shortly - for the foreclosure of seven of the remaining 18 schemes of UTI.
"Seven schemes are slated to be foreclosed. Eleven more remain, of which six are to mature this fiscal," U K Sinha, joint secretary (capital markets), said in New Delhi on Tuesday.
Five schemes of UTI, which are expected to mature by 2005, do not have major burden of interest outgo.
Of the seven schemes, which are slated to be foreclosed, the Children Growth Fund offering 14 per cent return has a shortfall of about Rs 5,000 crore (Rs 50 billion); it is slated to mature in 2021.
While splitting UTI, the government had indicated that it intended to foreclose some of the high-yielding assured return schemes as they were unsustainable in an era of soft interest rates.
On UTI's flagship scheme US-64, Sinha said the response to the tax-free 6.75 per cent bonds were overwhelming with a cash outgo of only Rs 1,400 crore (Rs 14 billion), which was less than Rs 3,000 crore (Rs 30 billion) provided in the budget.
The government provided Rs 6,500 crore (Rs 65 billion) for the bonds. But the US-64 bonds were valued at Rs 8,400 crore (Rs 84 billion) when its trading started in June 16.
The bonds are trading at a higher value considering the attractive return.