UTI drops millennium bond plan

MUMBAI, Nov 24: The finance ministry has decided not to go ahead with the India millennium bond issue of Unit Trust of India (UTI) following...

MUMBAI, Nov 24: The finance ministry has decided not to go ahead with the India millennium bond issue of Unit Trust of India (UTI) following the Unit Scheme-64 fiasco. The issue, targeted at the international investors, was to garner $ 500 million to fund infrastructure projects.

The decision has been taken recently in a high level meeting consisting of ministry and UTI officials. The issue was earlier scheduled for a launch in November but postponed to the first quarter of next year.

Besides, the investors’ sentiment towards India on a whole is not positive as evident in FIIs negative investment in the stock markets, officials add.

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Officials say the first priority of the organisation is to regain investors faith on US-64 which has a corpus of Rs 20,000 crore making it one of the largest savings schemes.

A committee, headed by Deepak Parikh, chairman of HDFC, is currently preparing a blue-print on how to revive investors’ confidence in US-64. The report is expected to be submitted by December15.

The UTI millennium bond was announced by the finance minister in his 1998 budget speech along with SBI’s $ 4 billion RIB issue. But due to a major shift in investors’ perception on UTI, the ministry has decided to play safe by launching the issue at a later date. The new date for the issue has not been finalised as yet.