Winding up of Funds Doesn't Mean Write-off for Investors: Franklin Templeton India Prez Sanjay Sapre

Franklin Templeton India President Sanjay Sapre on Monday said that winding up did not imply write-off for investors amid growing concerns over the firm's decision to close six debt mutual funds.

In an exclusive interview with CNBC-TV18, Sapre clarified that the apprehensions over winding up other funds in India aren't accurate and added that the company was committed to its 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.

He added that besides the six funds, all other funds continue to 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," Sapre said.

The funds that will be closed down are Franklin India Low Duration Fund, Ultra Short Bond Fund, Short Term Income Plan, Credit Risk Fund, Dynamic Accrual Fund, Income Opportunities Fund, the firm had said a statement.

On Monday, the Reserve Bank of India (RBI) said it is opening a special liquidity facility of up to Rs 50,000 crore to help mutual funds tide over a severe liquidity strain imposed by the coronavirus pandemic and redemption pressures.

“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,” Sapre said in the interview.

Sapre added that the firm witnessed considerably reduced liquidity in the bond markets in the period between March and April.

“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."