Letter to BS: Franklin Templeton crisis can wreak havoc in MF industry

A Yes Bank type of rescue package could be considered by the mutual fund industry to save itself from this financial coronavirus

This refers to the report “Franklin Templeton puts MF industry in damage-control mode” by Jash Kripalani (April 25). This move, though prompted by the declining credit repayment climate in the country owing to the economic shutdown, has the potential to wreak havoc in the nascent mutual fund (MF) industry in India. Coming in the wake of pervasive weakness in the NBFC space, the failure of a couple of financial institutions and banks, the Franklin Templeton debt funds lockdown could soon spread among the debt schemes of other MFs creating a gridlock for the industry as well as for investors. One option would be temporary takeover by the central bank directly or a UTI type of bailout. Given the rate of interest on fixed deposits offered by banks, reduced return on savings schemes run by the government and the downturn in the equity markets, the search for return is now hitting a wall decimating the lives and hopes of savers, especially the aged who are failing to make ends meet. A Yes Bank type of rescue package could also be considered by the mutual fund industry to save itself from this financial coronavirus.

Ganga Narayan Rath    Hyderabad

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