SC asks Franklin Templeton to return money to unitholders from cash-positive schemes

Unitholders of the six wound-up schemes of Franklin Templeton Mutual Fund (FT MF) will get a part of their money back soon.

The Supreme Court (SC) on Wednesday directed cash-positive schemes to distribute the funds to unitholders. The funds should preferably be transferred to unitholders accounts in 20 days, as per sources. The final order of the SC is not yet made available.

The court said SBI Mutual Fund (SBI MF) can oversee the distribution of these funds, and not FT MF. Unitholders will receive the funds in proportion to the units held by them.

It is still not clear whether SBI MF will also be given the authorisation for selling the schemes’ holdings during the winding-up process.

“We made the suggestion that the question of who is given the authorisation for overseeing the winding-up can be settled later; but for now, the cash already present in the schemes can be distributed,” said Paritosh Gupta of Gupta Law Associates, one of the lawyers who represented the Ahmedabad-based petitioners.

Five of the six schemes were cash-positive. They collectively held Rs 9,770 crore as of January 29, 2021.

Franklin India Low Duration Fund (65 percent cash), Franklin India Ultra Short Bond Fund (53 percent cash), Franklin India Dynamic Accrual Fund (41 percent cash), Franklin India Credit Risk Fund (25 percent cash) and Franklin India Short Term Income Plan (11 percent cash) are the cash-positive schemes.

Unitholders of Franklin India Income Opportunities Fund (FIIOF) will have to wait a little longer to receive their dues, as the scheme is not yet cash-positive. Investor assets stuck in this scheme stood at Rs 1,742 crore as of January 29, 2021.