An RTI has revealed that Franklin Templeton India did not take any approval from capital market regulator before winding up its six debt schemes. The country's oldest asset management company (AMC) had claimed that it had taken permission from Securities and Exchange Board of India (SEBI) before shutting down its schemes.
The six debt schemes of Franklin Templeton Mutual Fund were voluntarily closed on April 23, 2020, in wake of liquidity crisis and redemption pressures in bond markets due to the coronavirus crisis. The six funds were Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund. This resulted in locking in of investor wealth worth over Rs 30,000 crore.
The information related to the date on which the permission for winding up of the schemes was applied for and date on which it was granted was sought by an Ahmedabad-based petitioner, Areez Khambatta, the owner of soft drink maker Rasna. Areez Khambatta, his wife Persis Khambatta, and a trust promoted by them had filed a plea in Gujarat High Court, seeking a stay on the liquidation process of the six debt schemes of Franklin Templeton.
"SEBI has not granted any such permission to Franklin to wind up the said schemes," Mint reported, citing the RTI query.
The Khambatta family alleged that Franklin Templeton had claimed before the High Court of Gujarat and Supreme Court about SEBI granting permission for winding up of the six schemes.
Refuting the claim, a Franklin Templeton spokesperson said that the company has not made any statement before the High Court of Gujarat or Supreme Court regarding the same. "As clearly stated in all our communications, the decision to wind up these schemes was taken in accordance with regulation 39(2)(a)," the daily quoted the spokesperson as saying.
On June 3, the Gujarat High Court had issued a stay order on Franklin Templeton's e-vote on liquidation of debt schemes that was scheduled to be held from June 9 to June 11. The American fund house has appointed Kotak Mahindra Bank to monitor the winding up process of the 6 schemes.
By Chitranjan Kumar
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