Franklin Templeton India President Sanjay Sapre on Monday clarified that winding up doesn’t mean write-off for investors as concerns emerged over the firm's decision to close down six of its debt funds in India.
Speaking exclusively to CNBC-TV18, Sapre said the fear of winding up other funds in the country was not accurate and assured that they remain committed to the investors.
“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.
“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.
Mutual fund houses reached out to the Reserve Bank of India (RBI) and market regulator Securities and Exchange Board of India over the weekend after the closing down of Franklin Templeton's funds last week, sources told CNBC-TV18.
Franklin Templeton Mutual Fund on Thursday 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, the company said in a statement.
“I am sure one can imagine that decision to wind up these 6 funds was extremely difficult and we only made it because we believe it will be the only viable way to protect value for investors and give them an orderly realisation of the portfolio assets,” said Sapre.
Sapre further added that the firm saw significantly reduced liquidity in bond market in the March to April period.
“Over this period of March and April and particularly coinciding with the time when the lockdown was announced, we started to see significantly reduced liquidity in the bond markets for most debt securities, but particularly for securities that are rated below ‘AAA’ and we also saw unprecedented levels of redemptions in the funds following the COVID-19 outbreak and the lockdown."