Does your fund have exposure in Yes Bank? Here is what you must do

All those investors who have exposure to Yes Bank through mutual funds should not go for redemption, says expert. Reason being that if you go for redemption, the proceeds (money) may get locked up in the bank. Fortunately, all fund houses are ready to change the bank mandate overnight even, so in case you have a fund that has exposure to Yes Bank, you can give an alternate bank account for all your fund-related transactions.

JRL Money Founder Promoter Vijai Mantri shares some valuable insights with Zee Business Managing Editor Anil Singhvi.    

Investors should not panic at all. If RBI brings a rescue plan, it is likely to do something to protect the interest of Fixed deposit investors. On perpetual bond fund, it will be seen what the RBI does.

Mantri advises investors to diversify their portfolio and have at least 10 different funds. They also need to have bank diversification, especially a government bank account.  

A person who does not have a bank account with any other bank should immediately open an account with some other bank be it private bank or public sector bank.

Importantly, Mutual Funds usually take at least seven days to change the bank mandate, but considering the current situation, fund houses are doing this overnight. Generally, you have to submit a canceled cheque as proof that you have an account in a particular bank and all this documentation formality takes 7 days for updation in the records. But with the Yes Bank fiasco, the turnaround time has come to just one day.

That might delay your redemption by a day, but at least your money will be safe, the expert said. Moreover, there is a limit of withdrawal with the Yes Bank now. That limit will continue until the Reserve Bank of India (RBI) issues some other direction.

Anything over Rs 50000 will not be processed, Mantri says. Giving an example he said that, if a SIP of Rs 5000 is to be debited from your Yes Bank account, you will be left with only Rs 45000 for a further withdrawal. And if it is above Rs 50000 say Rs 55000, then SIP will not be processed at all.

On non-payment of SIP, will there be a penalty?
The expert says that Mutual Funds do not impose a penalty.

Another expert told investors to contact their Mutual Fund houses and apprise them of their situation to avoid any issue in the future.

In case of home loans, if the EMI is more than Rs 50000, the payment will not be processed, he says making it default. That could impact your CIBIL score. But this situation is a "force majeure" and you cannot do anything about it, you will not be declared as a defaulter.

Many Mutual funds have perpetual bonds of Yes Bank. It is a debt scheme, equity scheme, and balance fund scheme. The fund house with the biggest exposure has made its exposure zero. The investors cannot do much in this situation either and so they suffer a hit.

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Mutual Fund exposure in Yes Bank:

Company                        Exposure           Yes Bank       Loss
-- HDFC MF -                  2.27%                Rs 213 cr      126 cr
-- SBI MF                        1.52%                Rs 143 cr       85 cr
-- Kotak Mahindra           0.62%                Rs 58 cr         35 cr