
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.
The growing proximity of India and American has never been acceptable to Pakistan. Recently stunn
Prime Minister Narendra Modi is addressing the Shanghai Cooperation Organization (SCO) meeting on
From the academic session 2022-23 in central universities, now admission to undergraduate and pos
During the economic crisis in Pakistan, the Sangh has advised the government to follow the neighb
There has been no change in the prices of petrol and diesel by the government oil companies today
Maharashtra Chief Minister Devendra Fadnavis stated on Tuesday that the suspected 'lone wolf' ter
Apple iOS Update 2026: Stronger Security, Performance Improvements & New Features for iPhone Users
Apple has officially released the iOS 26.6 update for millions of iPhone users worldwide. While t
Today is the second day of the special meeting of the Counter-Terrorism Committee of the United N
There is now a continuous decline in corona cases in the country. In the last few days, there has
Motorola will launch a phone with a 108-megapixel camera, Realme and Redmi will get a challenge ..!
Motorola may soon launch two new smartphones in India. The company has recently launched Moto G10