Franklin Templeton's repayments to unitholders start next week: 5 key investor queries answered

Unitholders of Franklin Templeton mutual fund (FT MF) have some reason to cheer. They will receive a part of their dues from the wound up debt funds from next week. The Supreme Court (SC) had asked SBI mutual fund to distribute the cash in five of the six schemes that were wound-up. These are the schemes that hold cash (Rs 9,122 crore, as of January 15, 2021) in their portfolios, as they received repayments from some of their underlying holdings. The SC had said that the cash available as on January 15, 2021 is to be considered for distribution.

How much will I receive?To begin with, how much money unitholders will get depends on the cash levels of the schemes they may have invested in.

If you are a unitholder of Franklin Ultra Short Bond Fund (FUBF), you will receive around half of your dues, as the scheme held about 50 percent of its assets in cash, as of January 15, 2021. Unitholders of Franklin India Low Duration Fund will receive nearly two-thirds of their money, as the scheme held around 65 percent of its assets in cash. Investors of Franklin India Credit Risk Fund will receive around one-fourth of their value as the scheme has 26 percent in cash. Franklin India Dynamic Accrual Fund had 41 percent of assets in cash, while Franklin India Short Term Income Fund had nine percent of assets in cash. Unitholders of Franklin India Income Opportunities Fund need to wait little longer as the scheme is yet to turn cash-positive, which means it is yet to repay its borrowings.

Will the amount I receive depend on the number of units I hold?

Yes. You will receive funds proportional to the number of units held by you and based on the net asset value (NAV) that is recorded on the day before the distribution of cash starts. So, if the money distribution begins on Monday, then Friday’s NAVs will be taken into account for all unitholders. Monday’s NAVs will be applicable if payments start on Tuesday.

How can I know the tax implications of receiving the money?

FT MF has said that it will furnish capital gains statements to unitholders if they place a request. You can ask for it through the fund house’s website and call centre (1-800-258-4255) or send an e-mail to service@franklintempleton.com. Gains on debt fund units held for three or more years are taxed at 20 percent with indexation benefits. If you are an NRI investor, you will get your investments after deduction of TDS.

How will I get my money?

If you have a bank account registered in your folio, then SBI Funds Management – the firm in charge of distributing the cash – will credit the amount to your bank account directly.

In case your bank account is not enabled for an electronic transfer, a demand draft or cheque will be issued and sent to your registered address.

How do I know if I am eligible for the payments from Franklin Templeton?

Unitholders whose accounts are KYC-compliant with all the required details will get the payments during the week beginning February 15, 2021. You can check the status of your account in the wound schemes that you own here. Payments to unitholders who are yet to complete their KYC (know your customer) compliance, will be made once the process is completed.