In the film ‘Thunivu’ they have shown what happens when banks and mutual funds get involved in dillu mullu. But it is also full of misinformation. In this case, it is not known whether the film came out at the time, it has been reported that SEBI has initiated an investigation into the allegations of misleading investors in the investments made between Yes Bank – Nippon Mutual Fund (then Reliance Mutual Fund) between 2016 and 2019.
The company, now called Nippon India Mutual Fund, was not an Anil Ambani-controlled Reliance Asset Management Company before 2019. When the company was in trouble, in October 2019, Nippon India, a subsidiary of Nippon Life Insurance Company, bought 75% of Reliance Mutual Fund. Today Nippon India Mutual Fund is the fourth largest mutual fund company in the country. The company manages around Rs 3 lakh crore. Reliance Mutual Fund ran into trouble before the Nippon takeover.
What is the problem?
Yes Bank, a private bank, was on the brink of bankruptcy during 2016-19 due to poor management and a steep rise in bad loans. At that time, Yes Bank issued Tier 1 bonds worth Rs 84,100 crore. On that day, Reliance Mutual Fund took Rs 25,000 crore of public money and invested it in debt securities in a huge amount. In the background of this, it is said that there was a secret agreement between the bank and Anil Ambani. That means Yes Bank will invest in Anil Ambani’s companies in exchange for giving money to Yes Bank through mutual funds. That means people take money and run their own sinking company.
SEBI investigation
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Thus, in 2020, Yes Bank canceled the funds that Reliance Mutual Fund had bought for Rs 25,000 crore as part of its corporate restructuring. Bondholders are climbing the courthouse. In 2020, the RBI took over the bankrupt Yes Bank and sold it to the confederation of banks. In this case, SEBI is investigating whether the behind-the-scenes dealings were done to invest in bonds. People with knowledge of the matter spoke on condition of anonymity because the investigation is confidential.
What is the punishment?
If the allegations against the mutual fund, its officers or the bank are proved in the investigation by SEBI, they could face anything from restrictions on their access to the capital markets to monetary fines. Nippon India, the current owner of the mutual fund company, can also be held liable for the crime.
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