Franklin Templeton Mutual Fund: Sebi Defends His Circular, Asks Franklin To Focus On Returning Investor Money

The Securities and Exchange Board of India (Sebi) has “advised” the Franklin Templeton Mutual Fund to focus on returning the money that is stuck after the settlement of the six debt schemes to its investors. The regulator, in a late release Thursday, defended its October circular that required liquid schemes to limit its holdings of unlisted non-convertible bonds (ENTs) to 10% of the corpus.

On Wednesday, Franklin’s global chief, in a conference call with analysts, said the rule “orphaned” one-third of its funds, as these non-listed NCDs could not be exchanged after the circular.

Sebi said Thursday that the deadline for complying with these rules was later extended after the turmoil in the debt market caused by Covid-19.

“Despite clear regulations, some mutual fund schemes appear to have chosen to have high concentrations of bespoke, unlisted, opaque, high-risk structured debt securities with low credit ratings and appear to have chosen not to rebalance their portfolios even during the almost 12 months available to them so far, “the statement said.

“In the current scenario, Franklin Templeton should focus on returning investors’ money as soon as possible.” About Rs 26 billion of investor money has been blocked in these six Franklin debt schemes.