The UTI (Specified Undertaking) advisory board may foreclose six assured-return schemes by offering investors the choice of receiving cash or subscribing to tax-free bonds similar to those for the US-64 scheme.
The UTI advisory board, chaired by M Damodaran, met here on Tuesday to discuss the course of action for all the 17 assured-return schemes, with a total unit capital of about Rs 20,000 crore (Rs 200 billion), under UTI-I, senior government officials told Business Standard.
"UTI-I will, however, have to get the Securities and Exchange Board of India's approval before taking a final view," said an official.
As the decision to structurally wind up UTI-I had already been taken, it made sense to find a lasting solution for the assured-return schemes, the official added.
The advisory board was of the view that schemes with assured dividend and principal maturing between May and December 2003 would be redeemed, said officials.
There are three monthly income plans -- MIP 98 (II), MIP 98 (III) and MIP 98 (IV) -- that mature between June and October 2003. Three other schemes -- IISFUS 98, IISFUS 98 (II) and NRI Fund -- also mature in the period under question.
Among those considered for foreclosure, there were four long-term assured schemes, with a unit capital of Rs 5,374 crore on June 30, 2002, that mature between 2014 and 2021.
Two full-term assured schemes -- MIP 99 and MIP 98 (V) -- that mature in the next financial year were also considered.
Five annual reset schemes with capital assured at maturity would not be touched as UTI-I had the option to reset the interest rate offered to investors on them.
These monthly income plans, floated between 1999 and 2001, were MIP 99(II), MIP 2000, MIP 2000 (II), MIP 2000 (III) and MIP 2001. These schemes mature between October 2004 and March 2006.
The Centre provided Rs 6,500 crore (Rs 65 billion) in the Budget for 2003 to meet redemptions on US-64 and assured-return schemes maturing this fiscal.
While the total unit capital of the six schemes maturing this year stood at about Rs 6,000 crore (Rs 60 billion), the shortfall on them was about Rs 3,000 crore (Rs 30 billion).
The cabinet committee on economic affairs had committed to meeting all the obligations of UTI-I. It had also decided that interest levels for assured-return schemes would be reset at a lower level wherever possible.
© 2026