Franklin Templeton had in April this year wound up the six schemes citing unprecedented redemption stress and dearth of liquidity in the debt markets.
The wait for Franklin Templeton’s debt mutual fund investors has gotten longer with the Supreme Court nowadays ordering a keep on redemption by investors of the six would up schemes. The Apex Court also questioned capital markets regulator SEBI for not intervening to shield investor’s interest. Hearing the matter, the bench comprising justices SA Nazeer and Sanjiv Khanna directed Franklin Templeton to get in touch with a meeting involving unitholders to seek their approval for the closed schemes inside a week.
The two judge Supreme Court bench was hearing Franklin Templeton’s plea difficult Karnataka High Court order that observed that the six debt mutual fund schemes expected a uncomplicated majority consent from unitholders just before wounding-up. Now the fund home will have to get in touch with a meeting of unit holders of all its six debt mutual fund schemes inside a week and seek their approval to close them down. The court also added that the meeting would be without the need of any prejudice to the rights and contentions of all the parties.
: Franklin Templeton’s six wound up debt schemes recovery Rs 9,700 cr out of Rs 26,000 crore lost
Franklin Templeton had in April this year wound up the six schemes citing unprecedented redemption stress and dearth of liquidity in the debt markets. The six schemes had an estimated Asset Under Management (AUM) of Rs 26,000 crore in April.
The Supreme Court pulled up capital marketplace regulator SEBI for not acting swiftly. The bench observed that SEBI’s regulations are also sketchy and that the confusion had been owing to the language of their regulations, which the court mentioned a layman can not have an understanding of. Drawing parallels, the court questioned SEBI on why it did not intervene earlier like the Reserve Bank of India did in case of banks. SEBI informed the court that it has no powers with respect to the winding up procedure of schemes.