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Sebi Restricts Kotak Mahindra From Initiating Fixed Maturity Plans, Imposes Rs 50 Lakh Fine

A Sebi investigation revealed that the asset manager did not pay the full value of the six FMPs which matured in April and May 2019. Talking about the FMPs, they are close-ended debt mutual funds with launch and maturity dates. FMPs invest in debt papers that mature before the tenure of the fund expires.

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Securities and Exchange Board of India (Sebi), Indian markets regulator, on Friday, barred Kotak Mahindra Asset Management Co. Ltd from starting new Fixed Maturity Plans(FMPs) for six months. 

Sebi has also put up a total of a Rs 50 lakh fine on Kotak for violating mutual fund regulations, and the bank will have to pay the fine within 45 days. 

Sebi said that the Indian markets regulator has also directed Kotak Mahindra to return a portion of investment management and advisory fees which the bank received from unitholders of the FMPs. The refund will have to be paid with 15 per cent annual interest. 

A Sebi investigation revealed that the asset manager did not pay the full value of the six FMPs which matured in April and May 2019. Talking about the FMPs, they are close-ended debt mutual funds with launch and maturity dates. FMPs invest in debt papers that mature before the tenure of the fund expires.

Meanwhile, Kotak Mahindra in a public statement on the SEBI order said, "The SEBI order dated 27th August 2021 on KMAMC, pertains to six FMP schemes that matured in April and May 2019, which held investments in Non-Convertible Debentures (NCDs) issued by Edisons Utility Works Pvt Ltd and Konti Infrapower and Multiventures Pvt Ltd, belonging to the Essel Group and secured by a pledge of equity shares of Zee Entertainment Enterprises Ltd."

Sebi held that the deferral in installments, an absence of due investing resources into the organizations being in question, and an inability to keep investors informed adequately ahead of time were all violations of its guidelines.

Kotak Mahindra AMC did repay investors in its FMPs in September 2019 when the moratorium ended. "All the investors have been fully repaid along with applicable interest in September 2019. KMAMC is committed to protecting investor interest at all times," Kotak added in a statement. 


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sebi kotak mahindra bank