The market value of Nippon mutual funds is down to zero in the value of the bonds issued by private sector lender Yes Bank. Moreover, the fund house has restricted the fresh flows to 2 lakhs stated by the Indian Nippon Mutual Fund. the restriction is imposed only on the new applications, Switch-ins, systematic transfer plans, and systematic investment plans derived after March 5.
The declaration came after hours where yes bank placed moratorium with Reserve Bank of India. Regarding the withdrawals. The amount of withdrawal is limited to Rs 50000 per account for a month. The action by the central bank came after the bank stopped to raise capital to cover the potential losses. The fund house stated that the perpetual bond of Yes Bank in the scheme of Nippon India has marked down to zero. Even though Yes Bank is has marked down to zero there is no segregation because segregation can be permitted on the happening of SEBI triggers.
Nippon India Mutual Funds also stated that they will review these decisions regularly and take relevant measures based on clarity gets from the matter. After getting the clarifications regarding the matter, restrictions imposed on certain schemes like new applications, switch-ins, systematic transfer plans, systematic investment plans can be diluted in the interest of the unit-holders. By engaging in additional purchase activity. They also stated that they continue to remain with Yes Bank and they keep on checks the developmental activities regarding the matter. The monitoring activities are done for the following schemes such as Nippon India Hybrid Bond Fund, Nippon India credit Risk fund, Nippon India Equity hybrid Fund, Nippon India strategic Debt Fund, Nippon India retirement Fund –wealth creation, etc.
Initially, various Asset Management companies asked their clients who have an account with the troubled lender Yes bank to furnish details regarding the details of accounts for receiving redemption pay-outs alternatively. RBI in a notification stated that the financial position of Yes Bank had undergone a deep decline due to its inability to raise capital to recover the potential losses. Yes, Bank had also faced serious governmental issues that also resulted in a steady decline of the bank.
