Reuters, Apr 30, 2020
MUMBAI (Reuters) – Rattled by the shock closure of some high-profile domestic funds investing in high-yielding debt, Indian investors are quickly moving their cash into the safety of bank deposits.
FILE PHOTO: Commuters walk past a bank sign along a road in New Delhi, India November 25, 2015. REUTERS/Anindito Mukherjee
Bankers told Reuters they have seen heavy inflows into their traditional deposit schemes after one of India’s most prominent mutual fund houses in fixed income, Franklin Templeton Mutual Fund, said last week it was shutting down six credit funds.
Templeton wound up the funds due to a lack of liquidity in markets battered by the coronavirus pandemic. Their combined assets of about 280 billion rupees (almost $4 billion) had large exposures to higher-yielding, lower-rated credit securities.
As spooked investors called for a government intervention and debt mutual funds saw record withdrawals, traditional bank deposits have gained.
“Bank deposits have picked up, as a lot of money that is getting redeemed from mutual funds is also coming to banks now,” said Sumant Kathpalia, CEO of IndusInd Bank.
Flush with cash, banks have cut deposit rates. The weighted-average deposit rate of commercial banks is down 45 basis points since February 2019. Still, bank deposits grew by 9.45% year-on-year in two weeks ended April 10 compared with a 7.93% rise two weeks prior.
While up-to-date figures on the flows into deposits after the Templeton news will only be known next month, growth is expected to remain in low double digits in the coming months, said an executive director at a state-run bank.
Mutual funds investing in debt saw outflows of close to 1.95 trillion rupees ($25.5 billion) last month.
Retail investors have for long been flocking to tax-friendly debt mutual fund schemes on the promise that they are as safe as bank deposits and with little concern for potential credit risks in case of a default.
In 2017, credit opportunity funds, which invest mostly in higher-yielding bonds with ratings below the top AAA investment grade, saw record inflows.
That changed a year later as a string of defaults at a major infrastructure lender sucked liquidity out of the corporate bond market. An economic slowdown in 2019 triggered more debt defaults and exposed fault lines in the credit space.
The tipping point came last month as many investors redeemed their funds to preserve cash during a nationwide lockdown to contain the spread of the coronavirus, and funds such as Templeton took a hit.
Prateek Pant, co-founder of Sanctum Wealth Management, said he was facing a barrage of calls from investors worried about the safety of their debt investments.
“Overall, debt funds as a category is fine. But if you’re really losing your sleep because of that, then go ahead and put that money in a bank right now,” Pant said.
Reporting by Nupur Anand and Abhirup Roy; Editing by Simon Cameron-Moore
Our Standards:The Thomson Reuters Trust Principles.
Registered Office: CoWrks, Level 3, Birla Centurion, Century Mills Compound, Pandurang Budhkar Marg, Worli, Mumbai - 400030 Contact number: +91 22 61779500 | CIN: U74140MH2015PTC264932
Investor Complaint Handling
For any grievance or dispute please contact us at the above address and phone number or send us an email to. grievance@sanctumwealth.com.
In case of escalation, please reach out to the Compliance Officer at Email: compliance@sanctumwealth.com; Contact: +91 22 61779562 or the CEO at Email: ceo@sanctumwealth.com; Contact: +91 22 61779561
Portfolio Management Services and Research Services: : In case of any grievance / complaint, please contact the Compliance Officer or the CEO.
Broking and Demat: Complaint Filing Process
In case you are not satisfied with the response, you may contact the stock exchanges or depository directly: (NSE) Tel: +91 22 26598190 / 1800 2200 58 (Toll free) or Email: atignse@nse.co.in; (BSE) Tel: +91 22 22728517 or Email: is@bseindia.com; (NSDL) Tel.: +91 22 24994200 /
Toll free (Investor Helpline): 1800 1020 990 / 1800 224 430 or Email: relations@nsdl.co.in or Click here to submit Complaint / Query online.
If you are not satisfied with the response, you can further lodge your grievances with SEBI at SCORES or you may also write to any of the offices of SEBI. For any queries, feedback or assistance, please contact SEBI Office on Toll Free Helpline at 1800 22 7575 / 1800 266 7575
SCORES Website link : https://investor.sebi.gov.in | Saa₹thi 2.0 Mobile App: https://www.sanctumwealth.com/saarthi-app-digital
After exhausting the available options for resolution of dispute, if you are still not satisfied with the outcome, you may avail online conciliation and / or online arbitration through Online Dispute Resolution portal (SMART ODR portal) https://smartodr.in/login. SEBI Master Circular for Online Resolution of Disputes (for reference) : Download
Key Managerial Personnel
Shiv Gupta CEO & Designated Director | Email: ceo@sanctumwealth.com | Contact: +91 22 61779561
Nitin Nath Designated Director | Email: nitin.nath@sanctumwealth.com | Contact: +91 22 61779576
Mridula Iyengar Compliance Officer | Email: compliance@sanctumwealth.com | Contact: +91 22 61779562
Tanmay Kejriwal COO | Email: tanmay.kejriwal@sanctumwealth.com | Contact: +91 22 61779575
Investor Awareness
Trading and investments in Securities are subject to market risk, there is no assurance or guarantee of returns.
Please read the PMS Disclosure Document, Risk Disclosure Document and Dos and Don’ts prescribed by the Exchanges and Mutual Fund Offer Documents carefully before investing.
e-Voting: To participate in the process of e-Voting, please click on the following links: https://evoting.nsdl.com or https://www.evotingindia.co or https://eservices.nsdl.com
Dear Investor,
As you are aware, under the rapidly evolving dynamics of financial markets, it is crucial for investors to remain updated and well-informed about various aspects of investing in securities market. In this connection, please find a link to the BSE Investor Protection Fund website where you will find some useful educative material in the form of text and videos, so as to become an informed investor.
https://www.bseipf.com/investors_education.html
We believe that an educated investor is a protected investor !!!
Attention Investors: No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No need to worry about the refund either, as the money remains in the investor’s account. Prevent Unauthorized Transactions in your demat and broking account −> Update your mobile numbers/email IDs with your stock brokers and depository participants. Receive information of your transactions directly from Exchange & NSDL on your mobile/email at the end of the day..... Issued in the interest of Investors. (Ref Circular No : NSE/INSP/27346, BSE/ 20140822-30, NSDL 2014/94/97 & 2015 / 104). KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
Registered Office:
CoWrks, Level 3,
Birla Centurion, Century Mills Compound,
Pandurang Budhkar Marg, Worli, Mumbai - 400030
Contact number: +91 22 61779500
| CIN: U74999MH2017PTC302008 |
Real Estate Regulatory Authority License no. (A51900011805)