Kotak MF suspends subscriptions in two debt funds holding Yes Bank AT1 bonds
In a move aimed at protecting investors, Kotak Mahindra Asset Management Company has put a temporary hold on subscriptions for two of its mutual fund schemes. This decision follows the zero valuation of Yes Bank AT1 bonds after a significant bank reconstruction in March 2020. Similarly, Tata Mutual Fund has restricted new investments in the Tata Gold ETF Fund of Fund, although existing…
Kotak Mutual Fund has halted the acceptance of new investments in its Medium Term Fund and Credit Risk Fund as of Thursday. This move comes in response to a recent Supreme Court ruling that declared the Yes Bank's write-off of ₹8,415 crore in Additional Tier-1 bonds as illegal and arbitrary. The decision upholds a January 2023 Bombay High Court order.
Both of these schemes had previously invested in Yes Bank's Additional Tier-1 bonds, which were valued at a nil market value during the Yes Bank's reconstitution in March 2020, according to the fund. Kotak MF has temporarily ceased both fresh lumpsum investments and fresh SIP/STP registrations in these funds. Earlier today, the fund house proactively suspended subscriptions in both funds as a precautionary measure to protect investor interests.
The fund reiterated its commitment to acting in the best interests of its unitholders, noting that similar proactive measures have been taken in the past.
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- Kotak MF suspends fresh investment in Medium Term, Credit Risk funds thehindubusinessline.com
