Franklin Templeton Mutual Fund has shut six debt mutual funds on April 23. The fund house cited the unfavourable conditions in the debt market due to the Covid-19 pandemic as the reason to shut these schemes. The fund house has decided to seek investor’s approval to shut the schemes, but the process was stalled after some investors move the court.
“While we cannot comment on the First Information Report (FIR) as we have not seen its contents, it may be noted that filing of an FIR is simply the preliminary step in an investigation. Since the business has been carried out in compliance with the applicable laws and all decisions were taken in the best interest of our unit holders, we are confident about the outcome of any true and fair investigation conducted in this regard,” said Sapre.
Please do not believe un-substantiated rumours and baseless accusations, he said.
He also said that the press release issued by Chennai Financial Markets and Accountability (CFMA) citing the FIR is replete with various misleading and baseless allegations, besides being inappropriate, as the matter is currently subjudice. “We are not aware of the antecedents of CFMA and as admitted by them in their original complaint, none of their members were unitholders in the six impacted schemes,” he said.
Sapre also said that the books of the six impacted schemes are regularly audited by internal auditors, statutory auditors, auditors appointed by the regulators etc. and none of them have ever made any observation regarding misutilization of funds by the schemes.
“I would like to remind you that since April 24, 2020, the schemes under winding up have received over Rs 7,184 crore from maturities, pre-payments, and coupons. Four out of the six schemes are already cash positive,”said Sapre. “These amounts have been generated without the ability to efficiently monetize the portfolio. I hope the above helps assuage initial concerns some of you may have had based on incorrect reporting that took place around large hair-cuts that investors may face in these funds,”he added.
Sapre sought to assure unitholders that the fund house would “continue to follow due process, both in making investment decisions and in the winding up of these schemes.”