Franklin Templeton India crisis | Need to ensure liquidity issue doesn't turn into one of solvency: SBI MF

The panic will likely go away as even in the best of times the markets are often illiquid, said Ashwani Bhatia, MD and CEO of SBI MF commenting on the implications of Franklin Templeton's decision to wind up six schemes.

However, the fund house said there is a need to ensure that the liquidity crisis doesn't turn into one a solvency crisis. A credit line from the RBI will do a lot of good for the industry, Bhatia said.

Nothing has changed overnight and we think RBI & SEBI are already working together to ensure liquidity, Bhatia said pointing out that the mere announcement of a credit line in 2008 had boosted confidence tremendously.

Bhatia believes Franklin Templeton's move is in the best interest of the investors.

In an unprecedented decision, Franklin Templeton Mutual Fund has shut six of its open-ended debt funds, effective April 23. All these schemes followed the high-risk, high-return credit risk strategy. The fund house will now sell the underlying securities of all these funds over time and pay off their investors in a staggered manner.