Kotak Mutual Fund will merge it’s FMP Series 242 with Kotak Corporate Bond Fund. Kotak FMP Series 242 is set to mature on 18 October. The scheme was launched in August 2018 and has delivered a CAGR of 7.92 per cent since inception. The move could provide a template for the mutual fund industry to retain assets of expiring FMPs. Kotak FMP Series 242 has assets under management (AUM) worth Rs236 crore.

FMPs have definite launch and expiry dates. Unless investors reinvest the money in a new FMP or open-ended mutual fund, assets are lost for the MF industry.

In August, markets regulator Securities and Exchange Board of India (Sebi) had barred Kotak Mutual Fund from launching any FMP for the next six months and imposed a fine. The regulatory action was on account of Kotak Mutual Fund extending the maturity of FMPs exposed to Essel Group paper post their expiry.

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The extension was done to implement a standstill arrangement between Essel promoters and various mutual funds, including Kotak, to give supporters time to repay their debts. Hence, retaining existing FMP assets may have assumed greater importance for the fund house.