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    Franklin’s shuttered schemes receive Rs 1,005 crore in July, says Sanjay Sapre


    Sanjay Sapre, President, Franklin Templeton Mutual Fund, has written to investors that the six shuttered debt mutual fund schemes continue to receive cash flows.

    Sanjay Sapre, President, Franklin Templeton Mutual Fund, has written to investors that the six shuttered debt mutual fund schemes continue to receive cash flows. “From April 24 till July 31, 2020 the schemes have received INR 4,280 crore from maturities, pre-payments, and coupons. From July 1 till July 31, 2020 the schemes have received cash flows of Rs 1,005 crore from various issuers,” Sapre said in a note to investors.

    Franklin Templeton Mutual Fund shut six debt mutual funds on April 23, citing the adverse conditions in the bond market due to Covid-19 pandemic. The decision has been challenged in court. Sapre informed investors that the e-voting and the unitholders meet continue to remain suspended till they get further directions from the Karnataka High Court.

    Sapre, who has been regularly updating investors about the progress made by the schemes, also touched upon the defaults and downgrades faced by some of the shut schemes this week. Four among the six shuttered debt schemes of Franklin Templeton Mutual fund saw a fall in their Net Asset Values after two entities - Nufuture Digital (India) Ltd (NDIL) and Future Ideas Co Ltd (FICL) – defaulted on payments.

    “Due to default in payment, the securities of FICL and NDIL have been valued at zero, basis AMFI prescribed standard hair cut matrix and interest accrued and due has been fully provided. Securities of RTVPL will continue to be valued at 75%, basis recommended valuation. We wish to reiterate that these valuations only reflect the realizable value and do not indicate any reduction or write-off of the amount repayable by these companies,” Sapre said.

    Sanjay Sapre also responded to the question whether the AMC should pay borrowings before paying the investors back.

    “Many of you have asked why borrowings should be paid before paying investors. Regulation 41 of SEBI (Mutual Funds) Regulations, 1996 lays out the procedure and manner of winding up of a mutual fund scheme. The regulations require that the proceeds realized, shall be first utilized towards discharge of due liabilities (including borrowings) of the scheme. I would also like to clarify that AUM of the scheme is shown net of borrowings by the scheme. Repaying the borrowings neither impacts the AUM nor the NAV of the schemes. NAV or AUM represents the net assets of the scheme after reducing liabilities and expenses. Therefore, repayment of borrowings does not impact AUM or the NAV,” he said.

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    7 Comments on this Story

    Subhadip Chatterjee46 days ago
    I think the investors have shot at their own foot by placing these legal cases in court.. otherwise they could have started receiving their money back in trunches as they did with the money of Vodafone.. the AMC paid back both interest and principle. no one complained when the schemes performed in last one asked what quality paper they are holding. its easy.. more return means more risk. simple people.
    dhanesh vijay46 days ago
    Franklin 6 winded MF: 7000 cr withdrawn just 10 days before winding up is announced. is it coincidence or internal trading/ just tip of fraud. unfortunately unlike US, Europe these institutes are not fined heavily & thus made accountable for next 50 yrs also
    Rishi46 days ago
    No action has been taken by SEBI against Santosh Kamath ,who has invested a huge amount in unknown companies .Infact the company had paid him a special bonus for his performance of 15 -20 crores.He has become wealthy but investors are left with nothing.There is definitely a financial scam involved in this .I wonder why government has not taken a strict action against the company who has duped investors 30,000 crores of rupees.Frwnklin Templeton ,America's top executive has infact blamed SEBI for its policy.Instead of taking action against Santosh Kamat ,the fund manager ,the company blames SEBI .SEBI has appointed a firm for forensic audit but god knows when will the audit report findings will be released .Sapre ,is giving statem ents that schemes have started receiving money but what's the use ? Investors can't get the money back when they need.Case has been filed in court ,hope that they order Franklin to return money with interest and levy a heavy penalty on Franklin Templeton which will make Franklin liable to distrubute the same to investors for not giving the money back to investors .Santosh Kamath the main person responsible should be punished for this.I hope SEBI punishes the fund house and do justice to investors.
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