Your AMC shuts shop. Panic? Wait. What happens next isn't what most fear.
SBI Funds Management (SBI MF) will distribute the fifth tranche of Rs 3,303 crore to unitholders of Franklin Templeton Mutual Fund's six shuttered schemes during the week beginning Monday. With this, the total disbursement will reach Rs 21,080 crore, amounting to 84 per cent of assets under management (AUM) as on April 23, 2020, a Franklin Templeton MF spokesperson said on Sunday. Under the first disbursement in February, investors received Rs 9,122 crore, while Rs 2,962 crore were paid to investors during the week of April 12, Rs 2,489 crore during the week of May 3 and in the latest disbursement during the week of June 7, investors were paid Rs 3,205 crore.
In a statement, the central bank said heightened volatility in capital markets in reaction to Covid-19 has imposed liquidity strains on mutual funds (MFs), which have intensified in the wake of redemption pressures related to closure of some debt MFs and potential contagious effects therefrom.
The Supreme Court on Tuesday ordered that Rs 9,122 crore be disbursed within three weeks to the unitholders of Franklin Templeton's six mutual fund schemes which are proposed to be wound up.
Franklin Templeton Mutual Fund has said its six shut schemes have received Rs 15,272 crore from maturities, coupons and pre-payments since closing down in April 2020. The fund house had shut six debt mutual fund schemes on April 23 last year, citing redemption pressures and lack of liquidity in the bond market.
Franklin Templeton Mutual Fund on Thursday said its six shut schemes have received Rs 11,907 crore from maturities, pre-payments and coupon payments since closing down in April. Franklin Templeton MF had shut six debt mutual fund schemes on April 23, citing redemption pressures and lack of liquidity in the bond market. The schemes -- Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund, and Franklin India Income Opportunities Fund -- together had an estimated Rs 25,000 crore as assets under management.
Due to default in payment, the securities of FICL and NDIL will be valued at zero basis AMFI standard hair cut matrix, and interest accrued and due will be fully provided.
Bajaj Finance was the top laggard in the Sensex pack, dropping over 9 per cent, followed by Axis Bank, IndusInd Bank, HDFC, ICICI Bank and M&M. Reliance Industries, however, capped the losses by rallying over 3 per cent. Sun Pharma, Hero MotoCorp, L&T, PowerGrid and Bajaj Auto were also among the gainers.
The fund house had offered two options to affected investors -- either monetisation of assets by trustees or hiring a third party to conduct the process.
The Securities Appellate Tribunal has stayed a Sebi order that barred Franklin Templeton's Asia Pacific head Vivek Kudva and his wife Roopa from the securities market for one year.
There is so much liquidity in the system, in the global economy, and that's why the stock market is very buoyant. It will certainly witness correction in the future: RBI's Das.
After the Franklin Templeton episode, investor confidence has been shaken. Known brands have become more relevant to investors, as long as this psychological impact lasts.
Industry body Association of Mutual Funds in India on Friday assured investors that a majority of fixed income mutual funds assets are invested in superior credit quality securities and such schemes have appropriate liquidity to ensure normal operations. The statement by the industry body came after Franklin Templeton Mutual Fund voluntarily decided to wind up its six debt schemes citing redemption pressure and lack of liquidity in bond markets due to the coronavirus pandemic.
With a 'yes' vote, there is a more foreseeable outcome, while a 'no' could result in greater uncertainty, for which retail investors may not have the appetite.
The ED case follows the police complaint for alleged criminal conspiracy and defrauding investors.
In 2021, there is the risk of interest rates spiking. Investors should tackle duration risk with a longer investment horizon, suggests Sanjay Kumar Singh.
Nine lenders have exposure to the promoter entities and had taken listed operating companies' shares as collateral from the promoter companies.
Franklin Templeton Mutual Fund, which has closed six debt schemes, has said the winding-up process will be delayed in the absence of authorisation from investors and further steps will be possible only after seeking fresh approval from them. It further said that investors who do not have an e-mail ID or mobile number registered with the fund house will not be able to participate in the voting process. The date on which the voting would start has not been disclosed yet.
Sebi on Monday imposed a penalty totalling Rs 15 crore on senior officials of Franklin Templeton AMC and its trustee for violating regulatory norms in the case of winding up of six debt schemes in 2020. However, a spokesperson of Franklin Templeton said they disagree with the findings in Sebi's order and intend to file an appeal with the Securities Appellate Tribunal (SAT). A fine of Rs 3 crore has been levied on Franklin Templeton Trustee Services Pvt Ltd and Rs 2 crore each on Franklin Asset Management (India) Pvt Ltd President Sanjay Sapre and its chief investment officer Santosh Kamat, according to the Sebi order. In addition, the regulator imposed a penalty of Rs 1.5 crore each on fund managers -- Kunal Agarwal, Pallab Roy, Sachin Padwal Desai and Umesh Sharma -- as well as former fund manager Sumit Gupta.
'We know that returning money to unitholders at the earliest is the first and most important step towards resurrecting our brand and regaining investor trust.'
Tata Mutual Fund's 'own a piece of India' offering is suitable for informed investors.
The company has a market capitalisation of $743 billion.
In all this, the political establishment -- and especially the finance ministry -- appears the weakest link, and worse still, the possible reason for the political backing to Narain and Ramkrishna that emboldened them to defy all the sentinels -- the independent board, the auditors, top management persons like the chief compliance officer, the company secretary, and unbelievably the super-regulator Sebi, observes V Ranganathan.
Tata Group shares were among the top losers while Adani Ports emerged as the top gainer
The Securities and Exchange Board of India does not seem to have understood the enormity of what funds have been up to. If Sebi does not crack down on mutual funds using cooked-up credit ratings to hide behind promoter funding, this is bound to grow into a systemic menace, says Debashis Basu.But MFs decided to become lenders without the legal backing to secure themselves, or the skillset to assess lending risk. If Sebi does not crack down on mutual funds using cooked-up credit ratings to hide behind promoter funding, this is bound to grow into a systemic menace, says Debashis Basu.
While an impending rate cut is a good reason to enter debt funds, another is the high valuations in equity markets.
© 2026 Rediff.com - Investor Information - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances