Coronavirus impact | Government, RBI seized of Franklin Templeton matter, examining liquidity issues

Franklin Templeton India, one of the largest fund houses in the country, said it will shut six debt funds - Franklin India Low Duration Fund (FILDF), Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund, and Franklin India Income Opportunities Fund (FIIOF) - that carried credit risk. The winding up of these credit funds effective from April 23

Moneycontrol News

April 24, 2020 / 13:20 IST

The government is seized of the Franklin Templeton fund closure matter and liquidity issues would be addressed as and when necessary, a senior government official said.

"On the face of it, it looks like one specific fund-related matter, not really reflective of the whole spectrum. But still, the government is seized of the matter. RBI (Reserve Bank of India) is examining the liquidity issue. Adequate steps would be taken as and when necessary," the official told Moneycontrol.

Franklin Templeton India, one of the largest fund houses in the country, said it will shut six debt funds - Franklin India Low Duration Fund (FILDF), Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund, and Franklin India Income Opportunities Fund (FIIOF) - that carried credit risk. The wind-up of these credit funds was effective from April 23.

“In light of the severe market dislocation and illiquidity caused by the COVID-19 pandemic, this decision has been taken in order to protect value for investors via a managed sale of the portfolio,” Franklin Templeton declared in a statement on April 23.

India’s financial sector is under intense strain, grappling with a crushing liquidity crisis. Due to the uncertainty, investors began to panic and took to redemption, especially in credit risk funds such as the ones run by Franklin Templeton.

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