Nippon Life India MF buyers misplaced ₹1800 crore as a consequence of funding in Sure Financial institution’s AT-1 bonds – INA NEWS

Nippon Life India Mutual Fund’s choice to put money into Sure Financial institution’s AT-1 bonds has precipitated a lack of about Rs 1,830 crore to buyers investing in some schemes of the fund home. The AT-1 bonds have been later fully written down. This info got here to Moneycontrol from the small print of the discover issued by the capital market regulator SEBI in August 2024. Nippon Life India was previously generally known as Reliance Mutual Fund.

AT-1 bonds are a kind of debt instrument issued by banks to strengthen their capital base. A present trigger discover issued by Sebi in August alleged that although buyers suffered losses on investments in AT-1 bonds, the fund home earned Rs 88.60 crore as administration charges from the transaction. The transactions have been reportedly made as a part of a ‘quid professional quo’ association with Sure Financial institution.

Nippon Life India MF confirmed receiving the present trigger discover in a inventory alternate assertion, however the important thing allegations and particulars of the investigation weren’t made public. In its order dated August 8, SEBI had mentioned that this asset administration firm (AMC) incurred extra bills on a few of its schemes and the trustee didn’t be sure that the AMC adopted the principles. Sebi has sought clarification from the fund home as to why it shouldn’t be requested to return the administration charges earned and why it mustn’t face a ban for an inexpensive interval.

Total funding of Rs 2850 crore in AT-1 bonds

The transactions below SEBI’s scrutiny occurred when Reliance Capital was the father or mother firm of the asset administration firm. Another firms below investigation are Reliance Residence Finance and Reliance Business Finance. The present trigger discover issued by SEBI based mostly on the investigation alleged that the then Reliance Mutual Fund and Reliance Capital collectively invested Rs 2,850 crore in AT-1 bonds issued by Sure Financial institution. A portion of those investments have been in NCDs issued by Morgan Credit score Pvt. Ltd. In September 2019, the identify of the fund home was modified from Reliance Mutual Fund to Nippon India Mutual Fund.

The case has its roots within the interval between December 2016 and March 2020, when sure transactions between Sure Financial institution and corporations owned by Reliance Capital had drawn the eye of SEBI. The aim of the investigation is to seek out out whether or not there was a ‘quid professional quo’ association. Based on SEBI, this was a form of transaction association as Sure Financial institution had supplied a facility of Rs 500 crore to Reliance Residence Finance in January 2017. This was partly within the type of money credit score/working capital demand loans and the remainder by funding in NCDs issued by Reliance Residence Finance.

Later in October 2017, Sure Financial institution supplied one other facility of Rs 2,900 crore for funding in NCDs issued by Reliance Capital, Reliance Residence Finance and Reliance Business Finance.

CBI can be investigating

SEBI’s present trigger discover is a component of a bigger multi-agency investigation, by which the CBI can be concerned. The CBI is probing the cumulative funding of round Rs 2,850 crore made by Reliance Capital-owned companies in AT-1 bonds issued by Sure Financial institution. In December 2024, Moneycontrol had reported that Nippon Life India MF is below CBI investigation for investing Rs 950 crore in non-convertible debentures (NCDs) of Morgan Credit score Pvt Ltd, an organization owned by the Rana Kapoor household.