Uti Plans Balanced Fund For Infrastructure Sector

The Unit Trust of India (UTI) is planning its first-ever domestic balanced fund dedicated to the infrastructure sector. The scheme shall place a greater emphasis on debt.

"We are planning to launch the fund to finance infrastructure projects and at the same time benefit from concessions given by the government for such schemes," UTI executive director, A N Palwankar said.

According to UTI officials the scheme will compete with tax free bonds launched by other government institutions. Section 10(23G) of the Income Tax Act allows exemption on dividend and interest income of infrastructure capital funds and long-term capital gains.

UTI will be seeking the approval of Central Board of Direct Taxes (CBDT) shortly. Currently, under Sec 88 of the Income Tax Act, tax concessions are allowed upto investments up to Rs 10,000.

 

"We expect the government to allow investor rebates on investments upto Rs 70,000 for this fund. This will bring us at par with bond issues launched by other institutions. We will soon approach CBDT for the purpose," Palwankar said.

The decision to launch the scheme was taken at a meeting with zonal representatives yesterday.

A detailed investment plan has also been worked out by UTI for the financial year 1998-99. UTI expects to mop up around Rs 17,400 crore through various existing and new schemes during the year.

UTI hopes to raise one third of the target from US 64 alone , Rs 6000 crore with the monthly income plan schemes and from the Institutional Investors Special Fund Unit Schemes for the institutional investor. The rest will be raised through various other open-ended debt and equity schemes including offshore funds.

UTI is also in talks with Infrastructure Development Finance Corporation (IDFC) for subscription of any instrument of five-year tenure. As of now no agreement has been worked out between the two institutions.