Decoded: Making sense of the Franklin Templeton Mutual Fund saga

All schemes were holding highly illiquid and large portions of low-rated securities. As a result, the fund house had challenges meeting the redemption requests

The Securities and Exchange Board of India (Sebi) has directed Franklin Templeton MF to pay Rs 5 crore as penalty, return over Rs 450 crore collected as 22-month investment management and advisory fees, and imposed a two-year ban on launching new debt schemes for alleged irregularities in running six of its debt schemes that were shuttered last year. Further action against the top management is likely soon. Here’s why the fund house has landed in a big soup:
 
The ‘six schemes’
 
On April 23, 2020, Franklin Templeton MF decided to wind up six debt schemes citing liquidity challenges