New Delhi: The central government will provide an additional guarantee of Rs 1,300-1,400 crore to Unit Trust of India (UTI) to help bridge the shortfall in the Monthly Income Plan (MIP) 97 (3) scheme due for redemption in October 2002.

The guarantee will be over and above the Rs 1,000-crore guarantee already provided to the trust in June 2002 to honour the commitments to investors in MIP schemes maturing in June and August 2002, official sources say.

The guarantees are against the assets and cash inflows to UTIs Development Reserve Fund (DRF) and enable the trust to borrow from banks at fine rates to meet its repayment obligations under the schemes.

It was subject to the condition that the mutual fund will sell off some of the assets in DRF within six months. This time around too, the guarantee will be subject to certain conditions.