Fis Give Rs 1,700 Cr To Mf Arms

Financial institution majors, including State Bank of India, Life Insurance Corporation, General Insurance Corporation and Canara Bank, have pumped in Rs 1,700 crore as bail-out funds into their mutual fund subsidiaries _ which had been offering assured returns _ over the last five years.

The money was required when the monetary funds failed to generate the assured returns to redeem the units at a pre-fixed price. According to Securities and Exchange Board of India regulations, such assured return schemes are permitted only if the sponsor bank or financial institution is willing to underwrite the amount.

Owing to the failure by the mutual fund schemes to honour their commitments in the face of stock market vagaries, the parent institution had to cough up the requisite funds.

 

Data collated by Sebi and forwarded to the finance ministry shows that around Rs 1,000 crore of these funds accrued only on account of the bailout by Canara Bank of the Canstar scheme.

The next biggest spending was by General Insurance Corporation (GIC), which put in Rs 217 crore to bailout GIC Big Value (Rs 47 crore) and GIC

Rise-II (Rs 170 crore).

It was followed by SBI which paid out Rs 204 crore to meet the commitments of its mutual funds. The largest payout by SBI was Rs 126 crore in the Magnum Triple Plus scheme.

In the case of LIC, they poured in Rs 211 crore into four of the assured schemes offered by its mutual fund, with the largest contribution of Rs 137 crore being for Dhanvarsha-4.