SBI MF: Stuck Franklin MF investors to be repaid partly this week

(This story originally appeared in on Feb 15, 2021)

Mumbai: After almost 10 months, about 3 lakh investors in five of Franklin Templeton Mutual Fund’s six debt schemes that are in the process of closing down will receive part of their money during this week. Under a Supreme Court order, SBI MF — the executor for the distribution of the funds — will return Rs 9,122 crore to the investors of those five schemes. This was indicated in a letter from Franklin MF’s president Sanjay Sapre to the investors. Only those who had invested in Franklin’s Income Opportunities Fund will not get any money for now.

On the night of April 23 last year, Franklin MF had announced that the six debt funds would be closed down and it would return money to the investors. The process was delayed by several court cases, with the SC finally clearing the way for distribution of part of the funds that the six schemes had as of January 15 this year.

Of the total Rs 9,122 crore, a little over Rs 5,075 crore will be distributed to the investors of Ultra Short Bond Fund, while Rs 1,625 crore will be distributed to the investors of Low Duration Fund. In addition, Rs 1,025 crore will be distributed to the investors in Dynamic Accrual Fund, Rs 926 crore in Credit Risk Fund and Rs 469 crore in Short-Term Income Fund.

At nearly 63%, investors in Franklin MF’s Low Duration scheme will get the maximum of their money back. The ones in Short-Term Income Fund will receive just about 8% of their investments. On Friday, the SC also allowed the fund house to close down the six schemes. In April last year, faced with extremely low liquidity, the fund house had taken the decision to close it down to protect value for the investors.

After Franklin MF had announced the closure of the six schemes in April 2020, several of its investors as well as their groups had approached various courts in India, opposing the closure plan. The SC finally decided to club all the cases and had asked the Karnataka high court to decide on it. After the Karnataka HC passed its order, the fund house and an investor group had moved the SC again. On December 9, the SC asked the MF to take investors’ nod to close down these schemes.