The Supreme Court has approved the standard operating procedure (SOP) recommended by SBI Mutual Fund for distributing among unitholders the assets of six wound-up debt schemes of Franklin Templeton Mutual Fund. The plan was prepared in consultation with Franklin Templeton and market regulator Securities and Exchange Board of India.
The six schemes, shuttered on April 23, 2020, have already distributed Rs 9,122 crore among investors and have accrued an additional Rs 1,370 crore as on March 15.
SBI Mutual Fund told the apex court that it will operate on a "best effort basis", Mint reported. A team, led by an SBI MF official not below the rank of Vice President, would undertake the disposal of assets, the daily further added. Franklin Templeton Asset Management would have to appoint two mid-level officials against whom no disciplinary action has been taken to assist SBI MF in this.
The securities and funds would be disbursed to specially designated accounts. Franklin Templeton has been asked to provide the required documentation to SBI MF. It would also bear the cost of winding up.
SBI MF would not bid for any assets to avoid conflict of interest. A one-to-many platform would be set up to sell more liquid assets. For the rest, an over-the-counter system would be followed, with assets being sold through intermediaries or direct negotiation. Assets that could not be liquidated will be handed back to Franklin Templeton for necessary action.
Franklin Templeton would have to initiate proceedings against defaulting issuers if there are any defaults in the papers held by the debt schemes. Surplus collections would be deployed in instruments such as triparty repos or schemes like SBI Overnight Fund or SBI Liquid Fund. SBI MF will distribute the proceeds to unitholders whenever substantial amounts are collected.
SBI MF would continue to use the existing Registrar and Transfer Agent (RTA). Franklin Templeton has been tasked with arranging for extinguishment of units on distribution of proceeds and sending of statements of account to unitholders.