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Suspended Franklin’s debt fund assets liquidated, says SBI Funds Mgmt

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SBI Funds Management has completed the sale of assets in the six suspended debt scheme of Franklin Templeton Mutual Fund as directed by the Supreme Court and distributed ₹27,508 crore to the unit holders.

In April 2020, Franklin Templeton MF unilaterally decided to suspend investment and redemption in six of its debt schemes with assets under management of ₹25,215 crore due to a liquidity crisis in the debt market amid the Covid pandemic breakout.

Aggrieved investors had moved the Supreme Court which had directed SBI Funds Management to undertake the exercise of liquidation and disbursement of proceeds from sale of assets in the debt schemes of Franklin Templeton Mutual Fund.

Following this, SBI Funds Management has liquidated 217 securities and disbursed about ₹27,508 crore which constitutes 109 per cent of the value of the securities as of the date of winding up, April 23, 2020, said SBI Funds in a statement. “We are happy to share that the last tranche of the securities, forming part of Franklin Templeton MF wound-up debt schemes, has been liquidated as part of the above mandate given to us,” SBI Funds said.

The fund house further said that the liquidation activity was done without creating any market dislocation in order to get the best liquidation value and safeguard the interests of the unitholders of Franklin Templeton MF.

The schemes that were suspended include Franklin India Low Duration Fund, Dynamic Accrual, Credit Risk, India Short Term Income Plan, Ultra Short Bon, and Income Opportunities Fund.

As mutual funds are regulated by Securities and Exchanges Board of India (SEBI), when a mutual fund company shuts down, either the trustees of the fund have to approach Sebi for approval to close or SEBI by itself can direct a fund to shut. SEBI mandates that all investors have been returned their funds based on the last available net asset value, before winding up.

However, when a mutual fund is acquired by another fund house, two choices emerge: schemes persist with new management, or they merge with new schemes. In both cases, investors are given an option to exit the schemes with no load being levied.



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