CM – Franklin becomes shareholders of six debt funds $ 2,918.5 billion


The Franklin Templeton Mutual Fund will distribute ₹ 2,918.5 billion to shareholders of six bond funds beginning September 1, according to a notice from the fund house to mutual fund distributors.

The plans have thus repaid a cumulative total of 23,998.84 billion to investors, or 96.18% of the net asset value of the six plans settled on April 23, 2020.

SBI Funds Management Pvt. Ltd oversees the liquidation of the schemes and the distribution of their proceeds as directed by the Supreme Court. Once the money is paid, a proportional number of units will be deleted.

The six mutual funds were wound up by the Franklin Templeton Mutual Fund after heavy outflows. Some investors questioned the liquidation process and requested a vote on it. The Supreme Court ruled that such a vote was required and, accordingly, shareholder approval was obtained and granted in December 2020. Following the vote, the Supreme Court has appointed SBI Funds Management Pvt. Ltd is responsible for processing.

The Securities and Exchange Board of India (Sebi) fined the Franklin Templeton Mutual Fund and some of its directors and banned it from launching new debt fund programs for two years. However, the Securities Appellate Tribunal has suspended Sebis’s orders on the matter.

Investors in the six different schemes have received different amounts of redemption. Those in the Franklin India Low Duration Fund would have received 107.86%, including the upcoming payout in September 2021. However, those in the Franklin India Short Term Income Plan would have received 84.43%. Shareholders in Franklin India Ultra Short Bond Fund, Franklin India Income Opportunities Fund, Franklin India Credit Risk Fund and Franklin India Dynamic Accrual Fund would have received 99.58%, 94.53%, 93.35% and 93.09%, respectively.

One important factor Franklin investors should keep an eye out for is a series of Vodafone Idea Papers due for interest payment on September 2nd and 3rd. The papers have an interest rate reset clause and a put / call option against it. They were placed in « segregated portfolios » by the fund house in January 2020.

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