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Winding up of funds does not mean write-off of investor money, says Franklin Templeton India's Sanjay Sapre

In an exclusive interview with CNBC-TV18, Sapre assured that the investors will receive money over a period of time.

April 27, 2020 / 12:59 PM IST

Offering some relief to its investors, Franklin Templeton India President Sanjay Sapre on April 27 said that closure of the company's six credit funds in the country does not mean a write-off of its obligations to investors.

In an exclusive interview with CNBC-TV18, Sapre assured that the investors will receive money over a period of time.

"I want to clarify that the winding up of the funds does not mean a write–off and investors will receive their money over a period of time depending on how we are able to liquidate maturities and the coupons we receive, etc.," Sapre said.

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Calling it an "extremely" difficult decision, Sapre said that reduced liquidity in the bond market in March and April forced the fund house to take the drastic step.

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March and April saw a significant reduction in liquidity in the bond market. The company witnessed unprecedented illiquidity for securities rated below AAA, Sapre said.

He added that the schemes could not generate cash-to-fund redemptions after the lockdown was extended as it drastically reduced the risk appetite of the market.

Sapre said that given the size of its Indian business, it was not possible for the fund house to provide liquidity support.

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Sapre also said that the fund house has not wound up its "Fund of Funds" scheme and the rumours relating to it are incorrect. All other funds will remain open for subscription and redemption, he added.

“All our other funds besides these six funds remain open for subscriptions and redemptions. We have over 25 years of history in India, we have more than one-third of our global workforce based here and we remain committed to our investors and our business in India," he added.

In view of the Franklin Templeton crisis, the Reserve Bank of India (RBI) on Monday announced a Rs 50,000 crore special liquidity facility for mutual funds

Franklin Templeton Mutual Fund on April 23 said it was closing down six credit funds due to liquidity issues amid the coronavirus crisis, leading to fears of redemptions among the market players.

The funds that will be shut are Franklin India Low Duration Fund, Ultra Short Bond Fund, Short Term Income Plan, Credit Risk Fund, Dynamic Accrual Fund, Income Opportunities Fund.

Follow our entire coverage of Franklin Templeton India crisis here
Moneycontrol News
first published: Apr 27, 2020 10:17 am

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