Franklin Templeton gives moratorium to NCDs of three Future Group companies

Franklin Templeton, which closed six debt schemes last week in a shocking announcement to investors, has agreed to give moratorium to three Future Group companies under the scheme announced by the Reserve Bank of India (RBI) to help borrowers tide over the Covid-19 phase. Franklin has given moratorium to Rivaaz Trade Ventures Pvt Ltd, Nufuture Digital India Ltd, Future Ideas Co Ltd. Franklin has funded these companies through non-convertible debentures (NCD).

“Future Group has requested Fixed Income schemes managed by Franklin Templeton Mutual Fund , relief under the moratorium benefit announced by the RBI. This relief is applicable for the following issuers (three companies mentioned above), whose NCDs are held under various schemes of FTMF,” said Franklin in an update on Wednesday night.

A former executive director at a public sector bank who spoke to Moneycontrol on anonymity, however, said RBI circular on moratorium was not applicable to mutual funds’ NCD investments but for banks and Non-banking finance companies. “This circular was not applicable to mutual funds at all. It is not clear how they can give moratorium to NCD investments, which are technically investments and not term loans under the RBI moratorium circular,” the banker said.

Franklin said the decision to give moratorium was taken “well before the announcement of winding up of our 6 yield-oriented fixed income schemes on 23 April, 2020.” Templeton had announced closure of six 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) effective April 23. Total assets under management of these funds are estimated around Rs 25,000 crore.

On 27 March, the RBI had announced moratorium facility for all terms loans given by banks and NBFCs. This was done to help struggling borrowers on account of the Covid-19 impact.

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