‘NBFC-MFIs loan disbursement falls 43% to Rs 10,617 cr in Q2’

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Our members too have supported microloan borrowers during this unprecedented challenging period, helping them restart credit cycle and rebuild their livelihoods.”

Loan disbursed by non-banking financial companies-microfinance institutions (NBFC-MFIs) fell to Rs 10,617 crore in the second quarter of this fiscal, registering a de-growth of 42.8% year-on-year from Rs 18,565 crore in the same period last fiscal, microfinance industry association MFIN said on Tuesday.

The micro loan disbursed during the second quarter, however, saw over 18-fold quarter-on-quarter increase from Rs 570 crore. In the first quarter, only two lakh loans were disbursed, while the number of loans disbursed rose to 32 lakh in the second quarter.

“Average loan amount disbursed per account during Q2FY2021 was Rs 32,912, which is an increase of around 20% in comparison to corresponding quarter of the last financial year,” MFIN said in its 35th issue of the ‘Micrometer’, which provides an overview of the country’s microfinance industry.

Gross loan portfolio (GLP) of NBFC-MFIs grew over 12% year-on-year to Rs 71,147 crore as on September 30, 2020 as compared to Rs 63,275 crore a year ago. The GLP of Rs 71,147 crore included owned portfolio of Rs 57,270 crore and managed portfolio of Rs 13,878 crore. The GLP, however, contracted from Rs 71,724 crore as on June 30, 2020.

NBFC-MFIs received a total of Rs 9,854 crore in debt funding in Q2FY21, which is 4% higher than Q2FY20 and 65% more as compared to Q1FY21. Total equity grew by 20% as compared to Q2FY20 and was at Rs 17,178 crore.

Alok Misra, CEO, MFIN, said, “July to September 2020 quarter has witnessed gradual and steady progress in microfinance loan disbursement as also on repayment, compared to earlier April to June 2020 quarter. The full impact is still not seen as September was the first month post-moratorium. This rides on regulatory policy initiatives announced by the RBI and the government of India and ably implemented by microfinance lenders as also the resilience of borrowers.

Our members too have supported microloan borrowers during this unprecedented challenging period, helping them restart credit cycle and rebuild their livelihoods.”

Though the disbursements were picking up and so was the recovery, there were pockets of Covid stress, Misra said, adding the sector needed continued policy support on pricing regulations post revision of base rate for the third quarter and resolution of Covid impacted loan accounts to continue to serve BOP clients.

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Here are the latest FD Interest rates offered by top banks, BFSI News, ET BFSI

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Fixed deposits (FDs) are financial instruments provided by banks or NBFCs that offer investors better interest rates than the regular savings accounts. FDs are considered one of the safest investment options and are also called term deposits as they are booked for a fixed term that may range from 7 days to up to 10 years.

Given below are the latest interest rates offered by top banks for tenures ranging from 7 days to 10 years as of December 2020.

State Bank Of India
On FDs between 7 days and 45 days, SBI gives 2.9% interest. Between 46 days and 179 days, the interest is 3.9%. FDs of 180 days to less than one year will get you an interest of 4.4%. For deposits with maturity between 1 year and up to 2 years fetch 4.9% interest. FDs with tenor 3 years to less than 5 years give 5.3%, while those maturing in 5 years and up to 10 years give 5.4 percent.

HDFC Bank
On FDs between 7 and 29 days, HDFC Bank gives 2.50% interest. For 30 to 90 days, it is 3.00%. For 91 days to 6 months, the interest rate will be 3.50%. For FDs of 6 months 1 days to 1 day less than a year, the interest is 4.40%. For 1 year it is 4.90%. For 1 year 1 day to 2 years, you can get an interest of 4.90%. For 2 years 1 day to 3 years, the rate is 5.15%. On FDs between 3 year 1 day and 5 years, you can enjoy an interest rate of 5.30%. And FDs maturing between 5 years 1 day and 10 years will fetch you 5.50%.

ICICI Bank
On FDs between 7 and 29 days, ICICI Bank gives 2.50% interest. From 30 to 90 days, it is 3.00%. From 91 days to 184 days, the interest rate will be 3.50%. For FDs of 185 to 290 days to less than 1 year, you can get interest of 4.40%. For 1 year to 389 days to 390 days upto 18 months, the rate is 4.90%. On FDs between 18 months upto 2 years, you can enjoy interest rate of 5%. From 2 years 1 day upto 3 years, the interest rate is 5.15%, whereas for 3 years 1 day upto 5 years it is 5.35%. For 5 years 1 day to 10 years, the interest rate is 5.50%.

Axis Bank
For Axis Bank, the FDs between 7 and 29 days is 2.50% and 30 days to 3 months is 3.0%. From 3 months upto 6 months, the interest rate will be 3.50%, and from 6 months upto 11 months and 25 days it will be 4.40%. For FDs from 11 months and 25 days upto 1 year 5 days it is 5.15%. On FDs between 1 year 5 days and upto 18 months the interest rate will be 5.10% whereas from 18 months upto 2 years it will be 5.25%.

Senior citizen FD rates
FD interest rates vary from bank to bank depending on their tenure, amount, and type of depositor. Senior citizens, who are above 60 years, get special interest rates on their fixed deposits, which are often 0.5% above the prevailing interest rates.

Timely closure
Timely closure refers to closing the fixed deposit account at the time of its maturity only. When closed upon maturity date, the bank pays back the principal amount with the interest accrued over the tenure chosen.

Premature withdrawal
Premature withdrawal or breaking of FD is usually discouraged by lenders, and in such a case they levy a penalty along with paying back the principal amount and interest at a lower rate. However, in case of emergencies, certain banks do waive off the penalty.



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How you can maximise your health insurance

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Enhancement of sum insured

If you already hold a health insurance policy, you can enhance your SI at the time of renewal. Accordingly, your premium outgo will also increase and widen the scope of coverage. But if you find the premium outgo to be high for the increase in SI, then you can consider a super top-up cover.

A super top-up plan is similar to a regular health cover where the policyholder gets covered for hospitalisation and other medical expenses. It is different only in terms of coverage initiation. That is, a super top-up will cover you once hospitalisation expenses exceed a certain limit known as ‘deductible’. Let’s understand this with an example. Assume you have a total cover for ₹3 lakh in your base health policy and you choose to purchase a ₹5 lakh super top-up product which has ₹3 lakh as deductible. Now, during a policy year, you make a first claim for ₹1 lakh. This gets covered in your base policy. Your second claim is for ₹2.5 lakh. Now, ₹2 lakh gets covered by your base plan and the balance ₹50,000 comes from your super top-up plan. The super top-up plan comes into use as you have crossed the remaining deductible limit of ₹2 lakh.

Key points

Though sum insured enhancement or super top-up plan is cost effective and widens the coverage and benefits, there are certain points to keep in mind. First, all the waiting periods – initial, pre-existing disease and disease specific waiting period will continue to apply on the increase SI.

Second, other conditions, including co-pay and deductible, if any, will also apply on the additional sum insured.

On the positive side, as super top-up plans are similar to a health plan, they comes with benefits such as cumulative bonus, restoration of SI, and wellness programme.

Sum insured as reward

Most health insurance policies in the market offer built-in options to increase or restore your SI every year without any additional premium. Under this feature (known as restoration feature), the insurer fully reinstates the original SI once the entire health cover is used up during the policy year. Some insurers reinstate original SI even after partial exhaustion of (original) SI.

No-claim bonus or NCB is another feature through which the insurer increases your SI without any increase in your premium . However, the increase in SI comes with a limit, say, 10 or 20 per cent increase in base SI every year, usually up to 100 per cent of SI, if there is no claim filed by the policyholder.

You can even opt for the NCB rider over and above the in-built NCB in the policy for additional costs.

Your choice

Though insurers reward you with an increase in SI, it has its own limitations in terms of reinstatement of SI and having a claim-free year mandatory for NCB. The pace of increase may be slower as well. Therefore, between additional increase and a super top-up plan, you can choose what works for you, based on the additional premium you have to pay and the coverage and other benefits.

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How to plan your finances

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Anshul is a 26-year-old management graduate from a top business school in the country. He earns well, is single and the only child of his parents. His parents are not financially dependent on him and he has no other financial dependents.

He worries that his parents’ portfolio may not have much ability to withstand any financial shock such as a big unplanned expense, medical or otherwise. His parents have been conservative investors and he does not want to meddle in their finances.

He wants to ensure that his parents do not suffer financially once he is not around.

Health comes first

Additionally, he wants to understand how he must approach his investments. He has no real financial goals. He likes to travel but that part is quite manageable, given his level of income. He does not plan to buy a house right away. He would like to consider buying one after he gets married.

Since Anshul is worried about his parents’ financial well-being (in his absence), he needs to focus on insurance portfolio first, not just for himself but for his parents, too.

He has got his parents covered under his employer group health insurance plan. However, the coverage is only there as long as he is with the current employer.

His mother is aged 61 and his father is aged 62. They are in good health and have no pre-existing illnesses.

Life and disability cover

He must buy a family floater health insurance plan of at least ₹10-15 lakh for his parents. While he must buy a private health plan for himself too, he must buy an individual plan and not a joint family floater for his parents. The insurance companies price the family floater policies based on the age of the oldest member and health of the weakest member. By keeping himself out of the family floater, he will be able to reduce the premium for the entire family.

He must buy an adequate life and disability insurance for himself too. While the emotional void of losing a family member is difficult to fill, life insurance proceeds will ensure that they do not suffer financially. A term life insurance plan is the best and the cheapest way to buy life insurance. An accidental disability plan will come in handy if an accident results in disability and compromises his ability to earn.

Invest smart

About his investments, given his age, Anshul can afford to keep things simple. He needs to set aside money towards a contingency fund and any anticipated short-term expenses. Such money can be kept in fixed deposits or liquid funds.

The remainder of his savings can be routed towards a long-term portfolio. While he is young and can afford to invest aggressively, an aggressive portfolio does not mean 100 per cent equity. He must follow an asset allocation approach with an appropriate allocation to equities (both domestic and international) and debt.

A 60:40 equity:debt allocation is fine. He has to adjust equity exposure upwards or downwards slightly as per his risk appetite. He can also gradually add gold (5-10 per cent) to the portfolio for diversification. He must review and rebalance his portfolio annually.

Anshul must get the nominations right and keep the parents in the know of his investments and insurance. He can reconsider nominations when he gets married.

The writer is a SEBI-registered investment advisor at personalfinanceplan.in

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Know these tax deductions beyond Section 80C

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The financial year end is just about four months away, and it’s time to get going on your tax-saving investments if you haven’t done so yet. Now, besides the usual Section 80C instruments (up to ₹1.5 lakh a year), there are other ways to deploy money and save tax. Use these too to good effect.

But note that like Section 80C of the Income-Tax Act, other tax breaks are also only for those in the existing tax regime (that has higher tax rates along with benefit of tax deductions and exemptions).

Here are some key tax breaks beyond Section 80C.

NPS plus

Not only are investments in NPS – Tier 1 allowed under Section 80C – you can also put an additional ₹50,000 and claim tax deduction under Section 80CCD. This can translate into annual savings of ₹2,600 for those in the 5 per cent tax slab, going up to ₹15,600 for those in the 30 per cent tax slab. While the tax break is a sweetener, the NPS is a cost-effective pension plan to help you provide for post-retirement income.

Health cover

Given the high cost of medical treatment, it’s always good to have adequate health insurance cover for yourself and the family.

It helps that Section 80D gives a deduction of up to ₹25,000 a year for the premium you pay to get health insurance for yourself, your spouse and your dependent children; this goes up to ₹50,000 if any of you is a senior citizen. If you pay the premium to cover your parents, you get an additional deduction of up to ₹25,000 a year (₹50,000 if either of your parents is a senior citizen).

Expense on preventive health check-ups are also eligible for deduction up to ₹5,000 a year. This is part of the overall limit.

Donations

Donate to institutions and funds approved by the Government — these get you deduction under Section 80G of the Income-Tax Act. Give money; you won’t get the benefit if you give in kind such as food items, clothes and utensils. Also, cash donation is eligible only up to ₹2,000 a year. So, if you want to give a larger sum, give via non-cash modes such as cheques or online transfers.

Donations to many Government-run entities are fully deductible from taxable income, but the deduction is limited to 50 per cent of the donation to most non-Government entities. This tax break may be further limited to 10 per cent of your adjusted gross total income.

Interest on loans

Interest paid on education loans and home loans also help save taxes.

Section 80E allows deduction of the interest paid on loans to fund your education or that of your spouse, children or someone you take care of as a legal guardian. The loans must fund a Government-recognised course of study.

The deduction is allowed if the loan is taken from an approved financial institution or an approved charitable institution. You can claim the tax break for a maximum of eight years — starting from the year you start paying the interest on the loan.

Servicing your home loan gets you two tax benefits. One, repayment of principal is eligible for tax deduction under Section 80C up to the overall limit of ₹1.5 lakh a year.

Next, the interest payable on a loan taken to buy, construct, repair, renew or reconstruct your house is allowed as deduction under Section 24. The interest deduction for self-occupied homes is restricted to ₹2 lakh a year. For let-out and deemed let-out properties, there is no restriction on the annual interest amount. But the overall loss from house property cannot exceed ₹2 lakh a year; the balance loss can be carried forward for set-off for up to eight assessment years.

Besides, interest payable on the loan till the house is acquired or constructed is also allowed as deduction. This can be claimed in equal instalments for five years from the year in which the property is acquired or constructed. This deduction though is subject to the ₹2 lakh overall limit.

Interest on loans on let-out property is allowed even in the new tax regime, but subject to certain restrictions.

Interest on bank/PO accounts

Interest on savings deposits with banks, post office or co-operative societies have to be declared as income. But Section 80TTA allows deduction of such interest up to ₹10,000 a year. This benefit is not available on interest from other deposits such as fixed deposits.

Senior citizens get a higher benefit. Under Section 80TTB, their interest income on deposits (including fixed deposits and savings account deposits) is eligible for deduction up to ₹50,000. But with this, the ₹10,000 deduction under Section 80TTA will not be allowed.

Other breaks

Besides, there are other deductions such as contribution to political parties under Section 80GGC, medical expenses incurred to treat specified illnesses under Section 80DDB, and medical expenditure incurred on disabled dependents under Section 80DD; these are subject to certain conditions and limits.

Also, subject to conditions and limits, salaried employees are eligible for tax breaks on incomes such as HRA (house rent allowance), leave travel allowance and leave encashment on quitting the job. Salaried employees also get standard deduction of up to ₹50,000 a year. Read more on these tax breaks in the link below https://tinyurl.com/y6rg3ccc

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Life cover for young: Term plan or plain-vanila policy?

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I am 34-year-old, single, male, earning ₹30,000 per month. I don’t have term insurance . I searched some term plans on internet and other sources and got confused and can’t make out now which term plan is suitable. All term insurance plans have riders or add-ons. Is it useful to buy riders? Are returns of premium term plans worth the money? Which term insurance is suitable for me?

Arunkumar J

Given that you are young, a plain-vanilla life insurance policy should do. These plans will pay out the sum assured to your nominee in case of your death during the term of the insurance cover. On you surviving the policy term, the premium will not be returned. Note that in pure term plans, the premium even for a large sum insured (say ₹50 lakh/₹1 crore) is nominal. For instance, for a 30-year-old male, the premium for ₹1 crore sum assured (SA) policy will be below ₹18,000 per annum.

Among term life covers, you may look at policies of LIC, HDFC Life, MAX Life or ICICI Prudential as these are insurance companies with highest claim settlement record in the industry. If you are looking for plans with the lowest premium, you can go online to aggregator websites to see the options.

Coming to riders, note that these are nothing but add-on covers for additional premium. A popular rider that comes with term insurance is accidental death. In this, if an accident results in death of the insured, then, coupled with the base SA, an additional sum is paid to the nominee – some insurers even offer to pay double the SA for accidental death. For a small additional premium, it can be attractive to go for this rider that gives you higher SA. However, note that add-ons such as critical illness riders are expensive and do not offer a comprehensive cover.

Now, coming to your question on return of premium (ROP) term plans, while it looks like these products are offering insurance for free, it is not so the case. ROP term plans charge a high premium (almost double the premium of regular term covers) as they are guaranteeing to return the premium.

Also, though insurers promise to return all premiums paid in ROP term plans, it does not include premium on riders and the tax (Goods and Services Tax ) you paid for the total premium. So, when money comes back, it will be less than what you coughed up originally.

If one buys a plain vanilla term insurance plan and invests the balance in a bank fixed deposits , at the end of 30/40 years, he/she would have accumulated a bigger corpus.

Thus, the opportunity cost of returns one foregoes on the money invested in return of premium term plans is high.

 

Send your queries to insurancequeries@thehindu.co.in

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Readers’ Feedback – The Hindu BusinessLine

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The introduction of Portfolio on Sundays has received an overwhelming response. We thank our readers for the appreciation and the useful suggestions.

I have been an avid reader of The Hindu BusinessLine and Portfolio for many years and have always appreciated your deep dive analysis, and data-driven and research-backed presentation. Moving the edition to Sunday can, in a way, set the tone for the week ahead on how to position one’s money decisions. The first Sunday edition on December 6 was, as expected, very well put together. The Big Story by Aarati Krishnan and Chart Gazing sections were engaging reads. With one of the finest editorial teams, I look forward to your future editions.

—A Balasubramanian, MD and CEO, Aditya Birla Sun Life AMC

The Hindu BusinessLine Portfolio is now back on Sundays. A great read for any investor. Very topical, focussed articles and viewpoints; crisp summary of changes over the past week, a corner for Tax Query, (my favourite) Fund Query, Tech(nical) Query, Movers & Shakers (a more representative set of stocks).

—S Venkatesan, Ex-President and Management Committee member, Tamilnadu Investors Association

The Hindu BusinessLine has a ‘purist’ label tethered to it and imparts to its readers quality news and expert content. The new Sunday edition of the newspaper was extremely well-articulated. The stories were well-researched, data-oriented and analytical. The knowledge resource will surely help readers become aware of the financial world and help shape better opinions about funds, companies and industry.

—Rakesh Nangia, Chairman, Nangia Andersen India

I am very certain that BusinessLine Portfolio will help answer many questions of investors and guide them to make informed decisions. I look forward to reading this every Sunday.

—Motilal Oswal, MD and CEO, Motilal Oswal Financial Services

The Sunday BusinessLine edition is an excellent presentation. In fact, on Sundays, we are free, and it was disappointing that BL was not coming on Sundays.

—Lakshmi Narasimhan

Your articles are always great. You have useful information, and articles by SK Lokeshwari are commendable. The Sunday edition is very good and enriching, and must be continued forever.

—Madanagopal

The detailed study of HDFC Dividend Yield Fund and ICICI Prudential Quant Fund was very useful (December 6 edition). The market predictions are informative and the mutual fund ratings are user-friendly. Overall, the Sunday edition is very useful for young investors.

—Natarajan

The new initiative is very good. Mutual Fund Ratings are very good. An alternative to ET Wealth.

—Indrani

I have been reading BusinessLine right from the date of its introduction. I am very happy to see the Sunday issue again. I would be grateful if you can analyse various FMCG and auto companies and NBFCs using SWOT (strengths, weaknesses, opportunities, threats) analysis. That will help investors.

—Jayakumar Kannan

Our response: When we analyse stocks across sectors, we do consider SWOT parameters.

I liked reading BL today (December 6), and it gives me enough time to plan for the week ahead. Please consider the following: Instead of only 500 stocks (Take 500), please publish information on all traded stocks. Have half a page for new entrants into trading.

—C Vijayasingh Jesubatham

Our response: We consider top 500 stocks by market capitalisation for Take 500 as it is a broad and fair representation of the market. Regarding content for new entrants, we have columns such as DIY Investing, Mastering Derivatives and Simply Put in Portfolio. We also cover basics on various financial products/segments from time to time.

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How no-claim bonus works – The Hindu BusinessLine

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These neighbours’ daily routine of watering plants lead to a conversation on how a no-claim bonus works

Bindu: Soon these plants will start flowering — a reward for all the good care.

Sindu: Yes, if it pays my bills, why not!

Bindu: You can earn rewards from paying bills, too, sometimes.

Sindu: Is that so? How?

Bindu: Well, take motor insurance, for instance. Your insurer will reward you if you have been a good driver the previous year.

Sindu: My insurer will pay me cash if my vehicle wasn’t involved in any accident, is it!

Bindu: Ha ha! You’re expecting too much! The insurer will give you a discount on your motor insurance policy. It’s really not about having an accident either. You’ll get a discount as long as you haven’t made a claim in the past year. This is called no-claim bonus, or NCB.

Sindu: Does that mean I don’t have to pay any premium at the next renewal?

Bindu: No, no. You get a 20 per cent NCB discount if there is no claim filed by you during the first year. After that, you get an additional 5 per cent discount from your second year.

If you did not make any claims for a few years, you could earn discounts of up to 50 per cent at the end of five years.

Sindu: This is good. But surely there must be strings attached?

Bindu: Clever of you! This is only available on your own-damage cover and not on the third-party portion of it.

Sindu: But what happens to my reward if I sell my vehicle?

Bindu: NCB is for the policyholder and not the vehicle. Therefore, even if you replace your existing car or bike, as long as you have been renewing the motor insurance policy, you get to retain your NCB. NCB is not transferable. This means that if you sell your vehicle, you can retain your NCB by obtaining an NCB retention certificate from your insurer. This will help you get a discount on the premium when you buy the next vehicle. Check with your insurer about the validity of this certificate. It is usually valid up to three years.

Sindu: So, NCB will only benefit me if I haven’t made any claim. But my car always takes a few knocks — you know how people drive!

Bindu: Well, there is a solution for that as well. Some insurance companies, such as ICICI Lombard and Reliance General Insurance, offer NCB add-ons to protect the benefit you receive.

So, if you opt for this add-on cover, it allows you to keep the NCB discount even if you raise any claim request, up to a certain limit.

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Franklin Templeton voting: What should you do?

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Investors in six debt schemes of Franklin Templeton Mutual Fund have had to face torrid times for seven months after the fund house dropped its bombshell in April on plans to wind up these schemes.

Since then, they have been denied access to their money and the way forward has been clouded by the case doing the rounds of courts.

This week, Franklin Templeton (FT) sent out notices to investors seeking their votes for winding up. Here’s an explainer to help you decide how to vote.

Q. I already received a notice from FT on April 24 saying that that six schemes were being wound up. Why are they again seeking my vote?

Because the courts have asked them to get investor permission before they proceed with it. When FT issued its first notice in April, it took the view that under section 39 of SEBI’s mutual fund regulations, its trustees could take a unilateral decision to wind up any scheme. It proposed to take unitholder approval only for asset disposal after this decision.

But activist investors challenged both FT’s winding up decision and this interpretation in the courts. They argued that under Section 18, trustees of a mutual fund cannot wind up any scheme without unit-holders approving it first. The Karnataka High Court has ruled that FT trustees could initiate winding up only after first getting the approval of investors by simple majority.

Q. FT’s trustees have said that voting ‘Yes’ is best for me, will lead to ‘orderly’ winding up and fetch ‘maximum value’. If I vote ‘No’, they say, the scheme will make distress sales which will lead to losses on my NAV. Is this accurate?

This is the FT trustees’ interpretation of the situation. If you vote ‘No’, the trustees’ actions in April will stand invalidated. The fund will then have to re-open the six schemes for fresh redemptions. The fear is that if the six schemes are re-opened now after seven months, investors will rush to redeem their units.

The schemes may need to sell bonds that they hold before maturity. Many of them are lower rated and illiquid and their market sales are unlikely to fetch good value. Remaining closed for redemptions can help FT attempt negotiated sales or hold bonds to maturity hoping for full repayment, though this isn’t guaranteed.

Q. If I vote ‘Yes’, when will I get my money and how much haircut will I take?

There is uncertainty around both. If FT holds its bonds till maturity and gets full repayment, then you can expect your monies back broadly in line with the maturity profile of your scheme disclosed by FT on November 27.

As per this, Ultra Short Bond should be able to encash 82 per cent of its assets by April 2022, Low Duration Fund 79 per cent, Dynamic Accrual 57 per cent and Credit Risk 74 per cent.

For Income Opportunities and Short Term Income, 49 per cent and 77 per cent of repayments are scheduled from May 2023 to April 2025. Schemes that already hold significant cash can make quicker repayments.

As of November 27, Ultra Short Bond Fund held 46 per cent of its assets in cash and call money, Low Duration Fund 48 per cent, Dynamic Accrual 33 per cent and Credit Risk Fund 14 per cent, but Short Term Income and Income Opportunities had borrowings. The amount you get should broadly correspond with the NAVs at the time of repayment. But both the timing and the amount you will get are subject to issuers not defaulting or delaying repayments.

Q. What will be implications of voting ‘No’, as some activist and investor organisations have advised?

This advice is based on three arguments. The organisations believe that FT is guilty of mismanaging its debt schemes. They believe that SEBI was wrong to allow FT to borrow in excess of regulatory limits.

They also believe that if FT is allowed to proceed with its winding up with a ‘Yes’ vote, it will get away scot-free on the timing of repayments and may end up selling its bonds at deep discounts too, shifting the burden of illiquidity and credit losses entirely to its investors.

They, therefore, argue that FT’s debt schemes ought to be investigated for mismanagement, with the AMC or sponsor making good any losses if this is proved. They also argue that unitholders need to be paid the official NAV as of April 23 2020 in a timebound manner with the Court overseeing the process.

If the majority of investors vote ‘No’, the schemes will be re-opened for redemption — unless the court specifically stays it. This could lead to a scramble for redemptions. You will need to wait until the court delivers its judgement and hope for a favourable verdict to get full repayment.

Q. Looks like a devil-and-deep-sea choice.

It certainly is. You can vote ‘Yes’ and still demand that SEBI or the courts act on the results of investigations.

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