Franklin Templeton transfers distributors fees to investors in 6 suspended debt schemes

Suresh P. Iyengar | | Updated on: Mar 26, 2022

It will be distributed by the SC-appointed liquidator SBI Funds Management BalkansCat | Photo Credit: BalkansCat

Distributors up in arms against transfer of their commission worth ₹ 78 cr to investors

Franklin Templeton has transferred ₹78 crore of distributors commission accrued in the six suspended debt schemes to the investors as per the directives of market regulator Securities and Exchange Board of India (SEBI).

The distributors’ commission between April 24, 2020 and March 17, 2021 was transferred to Supreme Court-appointed official liquidator SBI Funds Management and added net asset value of the regular plan of these debt schemes on Thursday as the direct plans do not charge any distributor commission, said sources.

Franklin Templeton had accrued the distribution commission between the suspension of the schemes on April 24, 2020 and the appointment of official liquidator by the Supreme Court last March, said sources.

Distributors have dubbed the decision of mutual fund house and SEBI to transfer money to investors as unfair and unethical.

Requesting anonymity, one of the Pune-based distributors said all that the distributors did was to advise and handhold investors to put their money in these schemes for a well-defined regulator approved commission and if the scheme had failed to perform how can distributors be held responsible.

“Can an automobile company be held responsible and punished for a road accident?,” he questioned.

Suspension of debt schemes

Franklin Templeton had to face investors’ wrath after it suddenly suspended redemption and fresh investment in six debt schemes amid huge liquidity crisis in debt market on the back of first Covid outbreak in 2020.

Investors had an anxious moment as abrupt closure of a mutual fund was done for the first time ever and there were fear that they will lose their entire investment of ₹25,251 crore.

On the contrary, the fund house had returned ₹26,098 crore in eight tranches till last December by liquidating the investments held in these schemes. Investors had got 103 per cent of the AUM as on April 23, 2020. Interestingly, five out of six schemes had repaid 100 per cent of investors money, while the Franklin Templeton Short Term Income Plan has returned 96 per cent.

The schemes still have investments in two bonds which are maturing in 2023 and two segregated investments in Vodafone Idea and YES Bank.

Published on March 25, 2022
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