Reserve Bank's liquidity measures delayed: Franklin can't save Templeton's closed six schemes ...!

(Commercial Representative) Mumbai, Ta. 27 April 2020, Monday

Following the fiasco of the Franklin Templeton Mutual Fund, the Reserve Bank of India announced a special liquidity facility of Rs 50,000 crore for the mutual funds. It is learned that these measures were announced a week late for the closed debt schemes of the fund and this liquidity window will not benefit these schemes. ૬ Debt schemes have been closed by Franklin for redemption on April 6, 2020. Of course, like other fund houses, Franklin Templeton will be able to use this window for his other schemes. It remains to be seen whether the banks will agree to provide new funds to the fund house, taking into account the strength of its asset under management, considering the six closed schemes to be closed on a temporary basis.

Meanwhile, after the Franklin Templeton Mutual Fund decided to wrap up its debt scheme last week due to heavy pressure on redemption and lack of liquidity in the bond markets, the mutual fund today clarified that the fund promises to return the money to its investors as soon as possible.

Mutual funds have made it clear that investing in a scheme does not mean that investors have lost money. Sanjay Sapre, President, Franklin Templeton Asset Management (India), said in a note to investors, "We are committed to return the money to the investors as soon as possible and the confidence in our brand will be restored."

Franklin Templeton Asset Management Company last week launched its ૬Skimo Franklin India Law Duration Fund, Franklin India Dynamic Acreal Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan and Franklin India Short Term Income Plan, Franklin Announce the closing of the fund on Thursday Was born. The assets under administration in these 5 debt schemes are more than Rs 5,000 crore.

The asset manager pointed to the pressure of redemption and the lack of liquidity in the bond markets behind the voluntary closure of the scheme. Jenny Jones, the global CEO of Franklin Templeton, also said there was a commitment to India. "The decision to wrap up the yield-oriented scheme was extremely difficult and was taken only to protect the interests of investors," he said. We acknowledge that this decision has necessarily affected the liquidity of investors, but it has become necessary for unit holders to maintain this value, ”he said.

Investors have been further clarified that these schemes have consistent credit ratings in which investment strategies were followed in investment grade papers from Triple A to A rated papers.

This strategy has kept Schemo and its investors afloat so far. These schemes have been able to maintain a consistent significant cash flow and have been able to bring in flows in the last six months. In the meantime, the debt-to-fund exposure has been reduced by up to 50 per cent in the debt schemes summed up by Franklin Templeton Mutual Fund.