Franklin Templeton crisis: PC seeks govt intervention

New Delhi: Former finance minister P Chidambaram on Saturday urged the Centre to act promptly to address the issue of Franklin Templeton Mutual Fund’s decision to

Published on: Apr 25, 2020, 23:29:35 IST

By HT Correspondent

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New Delhi: Former finance minister P Chidambaram on Saturday urged the Centre to act promptly to address the issue of Franklin Templeton Mutual Fund’s decision to wind up six debt schemes, calling it a matter of “grave concern” for investors, mutual fund industry and financial markets.

He also recalled that a similar situation had arisen in October 2008 but the government moved fast to resolve it.

Franklin Templeton Mutual Fund has voluntarily decided to wind up six debt schemes citing redemption pressure and lack of liquidity in bond markets due to the coronavirus pandemic. This is the first instance when a fund house is shutting its schemes because of coronavirus-related crisis.

“Franklin Templeton Mutual Fund’s decision to wind up six debt schemes is a matter of grave concern to the investors, mutual fund industry and the financial markets,” Chidambaram said in a statement.

“I recall that a similar situation arose in the first week of October 2008 (during the global financial crisis) when mutual funds faced liquidity stress. Government immediately consulted RBI, SEBI (Securities and Exchange Board of India), IBA (Indian Banks’ Association), AMFI (Association of Mutual Funds in India) and others,” he said.

An urgent meeting of the Financial Stability and Development Council (FSDC) was convened and a solution was found by the end of the day, said, Chidambaram who was then the union finance minister in the Congress-led United Progressive Alliance (UPA) government.

“On the next morning, officers of RBI and SEBI met at 8 am, and RBI announced a 14-day special repo facility and allowed an additional 0.5 per cent of NDTL. The situation was resolved,” he said.

The former finance minister said that the markets will be closed on the weekend and expects the government to utilise the time to act promptly.

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