Six Franklin Templeton debt schemes get ₹438 cr

Suresh P Iyengar Mumbai | Updated on November 03, 2020

With the inflow in fortnight ended Oct 29, the surplus amount adds up to Rs 8,741 cr

The six suspended debt schemes of Franklin Templeton have received ₹438 crore as maturities, coupon and pre-payments in the fortnight ended October 29.

With the inflow, the total cash flows into the debt schemes that are being wound up stands at ₹8,741 crore since April 24 when both fresh investment and redemption were suspended.

Of the six schemes, Franklin India Ultra Short Bond Fund has the highest cash of ₹4,253 crore while the Low Duration Fund has surplus of ₹667 crore.

The Dynamic Accrual and Credit Risk funds have ₹519 crore and ₹204 crore, respectively.

The other two schemes —India Opportunities and Short term income plan — have outstanding loan of ₹427 crore and ₹772 crore. The loans were availed to meet the redemption pressure before the schemes were suspended.

The six schemes had asset under management of ₹25,000 crore before they were suspended.


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Piquant situation

Meanwhile, the fund house plans to move the Supreme Court against the Karnataka High Court order to seek investors approval for winding up the six debt schemes even while upholding Trustees decision to close down the schemes.

In a recent note to investors, Sanjay Sapre, President, Franklin Templeton Asset Management, said on basis of initial review the fund house believes it may be necessary to appeal aspects of the order in the Supreme Court even while the fund house is still in the process of studying the order.

Last month, the Karnataka High Court upheld SEBI regulation for winding up of mutual fund schemes and the decision of the Franklin Templeton Trustees to wind-up the schemes.

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However, the High Court said the consent of the unitholders will be required under regulation 18(15)(c) to operationalise the above decision. The Court stayed the operation of its judgment for six weeks.

The judgment has put the fund house in piquant situation as it is not possible to close the schemes with the consent of investors as they are agitating against sudden suspension of the six debt schemes.

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Published on November 03, 2020

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