The Prime Minister's Office (PMO) has suggested regulatory and liquidity measures to help mutual funds invest in stressed companies. These include setting up of 'Covid-19 Support Fund' for close-ended debt schemes. Such a scheme does not allow investors to invest or withdraw investments in the middle of the plan period.
The proposed move could provide a lifeline to asset management companies (AMCs), which have been battling a cash crunch for a long time, especially since the IL&FS case. Because of this, Franklin Templeton had to close six debt plans with assets of over Rs 30,000 crore. In a seven-page letter sent to the Department of Economic Affairs and Securities and Exchange Board of India (SEBI) earlier this month, the PMO had asked for appropriate steps for the effective resolution of stressed assets. Apart from this, relaxation in pricing system for companies going into restructuring/liquidation, amendment of side pocketing rules (stripping of stressed assets) to 15 days instead of instant and rights of debenture holders in case of default, etc.
The PMO wrote in the letter, "There is unpredictable uncertainty on the credit quality scenario of the Indian industry due to the deepening of the Covid-19 epidemic and the global recession, which is also showing a slowdown in the economy. This has forced economists to reduce GDP growth for FY 2021. Due to the slowdown in the economy, the financial pressure will also increase, but the improvement in demand can improve the quality of credit.
Addressing SEBI, the PMO has stated that close-ended schemes cannot be segregated or side pocketed as it is unclear whether an inter-lender agreement has been signed in such schemes and would have participated in the resolution process Whether or not The letter stated, 'It will be important to clarify that close-ended schemes can participate in the resolution process. For such schemes, the Reserve Bank of India and the Ministry of Finance, together with SEBI, can set up the Covid-19 Support Fund to compensate for inequality during the resolution process.
SEBI in August 2019 allowed AMC to enter into an inter-lender agreement with certain conditions. This was done because of the investment in debt schemes of Dewan Housing Finance, which was in crisis. It stipulated that the AMC may exit the inter-lender agreement if the settlement plan is not implemented within 180 days and the fund house is free to take legal action in case of violation of the terms of the agreement. According to the PMO, there should be a condition in the participation process. The letter reads, 'The reconciliation process is collective action, the fund house must unconditionally be involved in this process.'
Sources in the mutual fund's organization Amphi said that no mutual fund is a party to such an agreement and they are working with banks to settle cases like DHFL. The PMO has also raised the issue of doubt as to whether the trustee of the debenture can sign the inter-lender agreement or not, and how to get approval from the debenture holders for the same. The PMO thinks that in the event of the participation of debenture trustees in the agreement, they should also be included and in case they vote against the resolution plan, the minority stake should be protected through the liquidation price. Revision is suggested. It states that the time should be increased from immediate to 15 days for the separation of the trapped assets. This will help the mutual funds to take necessary action as per the competitive investors/lenders.
5 Android phones to compete with iPhone, will get 5G network support
Recently, four variants of the iPhone 12 have been launched and their price ranges from $ 699 to
Russia made an agreement with Armenia-Azerbaijan on Nagorno Karabakh
Armenia, Azerbaijan, and Russia have signed an agreement to end the military conflict on the disp
Union Minister Dr. Jitendra Singh has lobbied vigorously in Parliament for the convenience of stu
The United Nations Children's Fund (UNICEF) issued an alert regarding malnourished children in a
After losing the three-match ODI series against Australia, the Indian team will now play a five-m
Whether it's Tests or ODIs, Australia has consistently dominated India, but in the shortest forma
RBI Repo Rate: RBI increased the repo rate by 0.35% to 6.25%, so your loan EMI will increase further
RBI Governor has announced to increase in the repo rate after the MPC meeting which lasted for th
Oil companies have released the prices of petrol and diesel for today. Today companies have not m
The capital, Delhi, was once again shrouded in a thick, toxic smog. The air quality index reached
The rise in the price of crude oil in the international market and the shortage of coal in the co
