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Friday, Sep 20, 2002

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Bond option for UTI assured return schemes

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MUMBAI, Sept. 19

THE Government today said that investors in all assured return schemes of UTI would have the option of getting the payout on maturity in cash or in the form of seven per cent tax-free Savings Bonds 2002.

The Joint Secretary, Capital Markets, Department of Economic Affairs of the Finance Ministry, Mr U.K. Sinha, today told newspersons here, "No investor will be forced to accept bonds. The decision to get their returns in cash or bonds will be entirely of the investor.''

The Savings Bonds were introduced by the Finance Minister, Mr Jaswant Singh, immediately after he took office in North Block, as an investment avenue for people who wished to earn regular income. The bonds open for subscription on October 1 and will be available until March 31, 2003. According to the Government notification issued recently, these bonds are not tradable and do not have a collateral facility, which means buyers cannot take loans against them. It also added that it could only be gifted, and that too only to close relatives as defined under the Companies Act.

When asked about it, the UTI Chairman, Mr M. Damodaran, told Business Line that the Government had accepted that seven per cent tax-free bonds would be issued for those opting for the "bond option''.

"The tradability and other features of the bonds are not yet clear. We do not know if the Government will issue another series of these bonds with tradability,'' Mr Damodaran said.

He said the idea of issuing bonds was keeping in mind the profile of the investors in income schemes. "Those are investors who want regular income and not cash,'' he said.

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