A day after Franklin Templeton Mutual Fund, the ninth-largest in the country jolted investors with its decision to wind up six yield-oriented managed credit funds, veteran Congress leader P Chidambaram said that the matter was of “grave concern” and urged the government to act promptly and resolve it.
Franklin Templeton Mutual Fund’s step is the first instance when a fund house is shutting its schemes because of the coronavirus-related situation.
In a statement, Chidambaram said, “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 that a similar situation had cropped up in the first week of October 2008, when he was the finance minister. “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”.
“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,” the former finance minister added.
Chidambaram said fortunately, the markets will be closed on Saturday and Sunday and he expects that the government will act promptly and resolve the situation quickly.
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