PMO suggested measures to revive MF


Posted on 20th Jul 2020 01:22 pm by rohit kumar

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.

Did you know?Explore Trending and Topic pages for more stories like this.

 

 

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.

2 Like 0 Dislike
Previous news Next news
Other news

Salar Ott Rights: OTT rights of Prabhas' 'Salar' sold for so many crores, makers full before release

Veteran actor of South Cinema Prabhas is in the headlines these days. The actor's film Adipurush

China to train soldiers from developing countries in the next 5 years to deal with security challenges

China will train soldiers from developing countries in the next 5 years. China has revealed plans

Russia-Ukraine war: After 104 days, of the meeting of the two countries in Turkey, the UN will investigate the death of children in Ukraine

After 104 days, Russia and Ukraine will once again sit in Turkey for talks on Wednesday. There ca

Bhagwat said - We all have the same ancestors: Our DNA is one for 40 thousand years, people think that the Sangh is a paramilitary organization, but it is not so

Rashtriya Swayam Sangh chief Mohan Bhagwat has said that we all have the same ancestors. Today's

NZ vs PAK: Corona knocked in New Zealand camp, star batsman out of fourth T20; Bowling coach also turned out to be Covid-positive

The problems of the New Zealand team are not showing any signs of ending. After Kane Williamson w

Sambhal violence: The SP delegation will meet the families of those who lost their lives in the riot today, and will give help of Rs 5 lakh

The Samajwadi Party delegation will meet the families of those who lost their lives in the riot i

Weather Update: Severe heatwave condition in Delhi- UP- MP, heavy rain alert in these states, know-how will be the weather in your area today

Severe heat wave conditions are prevailing in various states of North and Central India. The temp

In 24 hours, 63,294 reports came corona positive, no country in the world got so many patients; Home delivery of alcohol will resume

In the last 24 hours, 63 thousand 294 new corona patients have been found in Maharashtra. There w

Delhi Unlock Update: Many restrictions including night curfew ended in Delhi, Delhi Metro started running with full capacity

After the rapid decrease in the cases of the corona, many changes are being seen in the country's

COVID-19: Active cases of corona in the country are more than 6400, 163 cases of the new XFG variant; How dangerous is this variant

For the last 20 days, a new wave of corona has been seen in India. The number of infection cases

Sign up to write
Sign up now if you have flare of writing..
Login   |   Register
Follow Us
Indyaspeak @ Facebook Indyaspeak @ Twitter Indyaspeak @ Pinterest RSS



Play Free Quiz and Win Cash