With Yes Bank in the news for all the wrong reasons, mutual funds are in the spotlight again.
As on January 30, 2020, 22 asset management companies had investments in shares of Yes Bank, while 11 fund houses had exposure to bonds of the bank, according to the data sourced from Morningstar India.
The total of investments of fund houses in Yes Bank's equities was worth Rs 526.42 crore, while debt exposure stood at Rs 2,819 crore.
Mutual fund holdings for February was not available with Morningstar.
On March 5, the Reserve Bank of India (RBI) imposed a month-long moratorium on Yes Bank. It has restricted the withdrawals that customers can make from their Yes Bank accounts to Rs 50,000 until April 3, 2020.
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The moratorium comes in the wake of deteriorating financials of the bank. Till the RBI figures out a restructuring plan (the State Bank of India said in an exchange filing on March 5 that its board is exploring an investment in the Bank), depositors of the bank will face some difficulties in accessing their funds.
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For the next month, Yes Bank will be led by the RBI-appointed administrator Prashant Kumar, an ex-chief financial officer of State Bank of India (SBI).
Going by the data from Morningstar, SBI Mutual Fund had the highest holding worth Rs 152.83 crore in Yes Bank’s shares as on Jan 31, 2020. The bank-sponsored fund house had Rs 151.41 crore invested in shares through passive funds, while the balance Rs 1.31 crore was in active funds.
The second highest exposure was held by HDFC Mutual Fund. In this case, HDFC MF had holdings worth Rs 142.03 inactive funds and the rest in passive schemes.
Kotak Mutual Fund and Nippon India had investments worth Rs 62.60 crore and Rs 61.21 crore, in the equity shares of Yes Bank.
ICICI Prudential Mutual Fund too had exposure but only in passive funds.
Other two fund houses that had over Rs 30 crore exposure were Franklin Mutual Fund and UTI Mutual Fund.
Nippon India Mutual Fund (Reliance Nippon Life Asset Management) had the highest exposure in the troubled bank’s bonds. Four debt schemes of the invested had total investments worth Rs 1,806.28 crore in bonds of Yes Bank.
Post the RBI announcement, Nippon Mutual Fund, in a note to investors, said it has marked down the value of Yes Bank to zero and restricted the subscription limit to Rs 2 lakh per investor in the schemes that have exposure to the private lenders’ bond.
"Perpetual bonds of Yes Bank in the schemes of NIMF have been marked down to zero. The valuation adjustment reflects the uncertainties around the realisable values but does not in any manner indicate any reduction or write off of amount repayable by Yes Bank or eventually realisable by the schemes holding these instruments," the note said.
Nippon AMC took the decision due to the lack of information and understanding on how regulations and decisions of the RBI and the government will pan out for Yes Bank.
Franklin Mutual Fund and UTI Mutual Fund held Yes Bank’s bonds worth Rs 475 crore and Rs 336 crore, respectively.