The government on Wednesday issued special 6-year bonds worth Rs 328 crore (Rs 3.28 billion) for meeting Unit Trust of India's shortfall in assured return scheme.
The Government of India UTI Bonds carry an interest rate of 6.2 per cent and mature in 2010.
The Union finance ministry said the bonds have been issued to the administrator of Specified Undertaking of UTI (SUUTI) for meeting their liabilities arising on account of shortfall in assured return scheme.
The investment in the UTI bonds will not be eligible for statutory liquidity ratio of banks and financial institutions.
The bonds can be transferred and eligible for market ready forward or repo transactions.
However, it will not be eligible for repo or reverse repo transaction with the Reserve Bank of India.
The UTI bonds are being issued to give investors a choice of switching either to debt papers yielding high returns or taking cash for those schemes which are being foreclosed before their maturity date.