Franklin will give ₹2,918.5 crore to unitholders of six loan MFs

With this, the plans will return cumulatively ₹23,998.84 crore or 96.18% of the net asset value of the six schemes which were closed on 23 April 2020.

SBI Fund Management Pvt. Ltd. is overseeing the liquidation of the schemes and distribution of their proceeds as per the direction of the Supreme Court. Once the money is paid, a proportionate number of units are extinguished.

Six debt mutual funds were closed by Franklin Templeton Mutual Fund following heavy outflows. Some investors challenged the winding up process and sought votes on it. The top court ruled that such a vote is required, and accordingly, the consent of the unitholders was sought and given in December 2020. After the vote, the Supreme Court held SBI Funds Management Pvt. Ltd. in charge of the closing process.

The Securities and Exchange Board of India (SEBI) imposed a penalty on Franklin Templeton Mutual Fund and some of its directors and barred it from launching new debt mutual fund schemes for two years. However, the Securities Appellate Tribunal had stayed the SEBI order in this matter.

Investors have received different levels of repayment in six different schemes. Franklin India Low Duration Fund would have received 107.86% including the coming September 2021 payout. However, those included in the Franklin India Short Term Income Plan would have received 84.43 per cent. Unitholders in Franklin India Ultra Short Bond Fund, Franklin India Income Opportunities Fund, Franklin India Credit Risk Fund and Franklin India Dynamic Accrual Fund would have received 99.58%, 94.53%, 93.35% and 93.09% respectively.

An important factor to watch for Franklin investors is a series of papers from Vodafone Idea, which are due for interest payments on September 2 and 3. The papers contain an interest rate reset clause and a put/call option against them. They were placed in a ‘separate portfolio’ by the fund house in January 2020.