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Corporate governance

How Franklin failed an NRI investor well before winding up its six debt funds

Investor complaints alleging sharp practices and preferential treatment in the AMC have put the focus on the efficacy of trustees who joined recently. The huge exposure to the Piramal-Shriram combine, which crosses the 20% mark in three of the six schemes, is a cause for concern. It’s time for a serious response from regulators on rules governing fund managers.
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nsundareshasubramanian
4 May 2020 12 Mins Read 16 comments
Arvind Sonde, Sanjay Johri, and Sandra Martyres became independent directors of the trustee company of Franklin Templeton Mutual Fund in India only last year; courtesy of CII, Tata, Twitter
Arvind Sonde, Sanjay Johri, and Sandra Martyres became independent directors of the trustee company of Franklin Templeton Mutual Fund in India only last year; courtesy of CII, Tata, Twitter
Jitendra Balani is a young financial-services professional based in Manila, the Philippines. Two years ago, he was looking for avenues to park his savings even as he was scouting for a long-term investment in property, which was taking time. That’s when he came across Franklin Templeton’s advertisements, offering a short-term fund as a highly liquid option
expected to be minimal. And poor assessment of default and liquidity risk is happening too frequently — 2008, 2013, IL&FS, DHFL, etc., and the ensuing side-pocketing. Fund managers have to be prudent in balancing various risks including liquidity and default. Transparency has to be maintained in highlighting such risks to investors including by distributors.” ( Graphics by Sadhana Saxena)
Jitendra Balani is a young financial-services professional based in Manila, the Philippines. Two years ago, he was looking for avenues to park his savings even as he was scouting for a long-term investment in property, which was taking time. That’s when he came across Franklin Templeton’s advertisements, offering a short-term fund as a highly liquid option expected to be minimal. And poor assessment of default and liquidity risk is happening too frequently — 2008, 2013, IL&FS, DHFL, etc., and the ensuing side-pocketing. Fund managers have to be prudent in balancing various risks including liquidity and default. Transparency has to be maintained in highlighting such risks to investors including by distributors.” ( Graphics by Sadhana Saxena)

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