New Delhi, June 20 :    New Delhi, June 20:  Bankers who have been asked to bail out the cash-strapped Unit Trust of India (UTI), which faces an end-of-the-month payout problem on two of its assured income schemes, are insisting on charging a 10 per cent interest rate on loans to the mutual fund major. The bankers' stand flies in the face of a government guarantee granted to UTI and its pressure on them to provide cheap loans to the mutual fund. The chairman of a Delhi-based nationalised bank, which is part of the consortium, said: 'We have offered money at 10 per cent ... but UTI would like this to be nearer 8 per cent and have not lifted anything till date.' The bankers, who have pointed out to UTI that it has an existing credit line of Rs 4,000 crore offered to it by a consortium of bankers led by State Bank of India, are however unwilling to lend at lower rates as their unspoken perception is that UTI is a losing proposition. Although UTI needs just a little more than Rs 1,000 crore at this point of time to bridge the current gap between what it has in its development reserves and the payouts it is bound to give to investors, it will have to fork out something like Rs 4,000 crore between now and mid-2004. The lenders doubt its ability to earn this entire amount, and at the same time, pay back bankers. Many bankers feel UTI may well be headed for a debt trap. Consequently, the sovereign guarantee on these loans by the government is not being seen as any major incentive to reduce the interest rate. Nor are they enthusiastic over UTI's offer to securitise various receivables in order to access cheaper loans. This has come about despite the fact that banks have been giving short-term loans to various companies at 9-9.5 per cent. With transaction costs on deposits at about 7-8 per cent, most public sector banks can, if they so wish, reduce interest to a little over 8 per cent. Sources said they expected the finance ministry to exert more pressure on the banks through their nominee directors to get them to reduce interest on loans to UTI, as well as to agree to be sponsors for an asset management company for the mutual fund. 'Ultimately, the banks may agree to lower rates but that is a matter of negotiation and commercial judgement. The government will try to help out any of its babies which gets into trouble, that is natural. But this desire to help has to be balanced with judgement,' bankers said. The problem that UTI faced, ministry officials said, is that these are all assured income schemes promising fixed rates of return varying between 10.5 and 14 per cent, whereas the real value of these schemes have been falling. As a result, UTI has been paying assured returns by dipping into the capital base of these schemes. About a quarter of the MIP money is parked in stocks, while the rest is invested in the debt market. Repeated market crashes has resulted in the unit base's value coming down while repeated cuts in interest rates on debt - which stand at about 9.5-10 per cent - has meant even the assured income schemes have been badly hit. In some cases, even the debt investments have come unstuck as they were used to buy debt instruments floated by companies which are doing badly and have been unable to pay interest returns. These include steel makers and North India-based engineering companies. With nearly Rs 35,000 crore invested in UTI's MIP schemes, the gap between promised returns and actual money in the kitty could well increase in the future as markets show little signs of reviving.