Former Finance Minister P Chidambaram on Saturday said Franklin Templeton’s decision to close six of its debt schemes in India is a “matter of grave concern”. In a statement posted on Twitter, Chidambaram urged the government to act promptly and resolve the issue.

The global financial company announced on Thursday that it will close six of its debt schemes in India with immediate effect amid the severe market dislocation and crisis caused by the Covid-19 pandemic. The move will lock in about Rs 30,800 crore of investors’ money, and they will not be able to withdraw it immediately.

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“Franklin Templeton Mutual Fund’s decision to wind up six debt schemes is a matter of grave concern to the investors, mutual fund industry and the financial markets,” Chidambaram said.

The Congress leader recalled a similar situation that arose during the global financial crisis in October 2008, when mutual funds faced liquidity stress. The then United Progressive Alliance government had immediately consulted the Reserve Bank of India, the Securities and Exchange Board of India, the Indian Banks’ Association and the Association of Mutual Funds in India among others, Chidambaram said.

“An urgent meeting of the Financial Stability and Development Council was convened and a solution was found by the end of the day.” He said the next morning, officers of RBI and SEBI had met at 8 am, and the RBI had announced a 14-day special repo facility and allowed an additional 0.5% of Net Demand and Time Liabilities, resolving the situation.

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“Fortunately, the markets will be closed today and tomorrow. I expect that the government will act promptly and resolve the situation quickly.”

India’s debt markets have been under stress since the government imposed the lockdown to combat the spread of the coronavirus. Covid-19 has infected over 24,942 people in India so far with 779 deaths, according to the Ministry of Health.

Franklin Templeton’s decision sparked worries of panic withdrawals and triggered a storm on social media with distraught investors calling for regulators to step in, Reuters reported.

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“It is just like a run on banks. Across debt mutual funds, there will be loss of trust,” Omkeshwar Singh, head of mutual fund advisory firm RankMF, told Reuters. “Earlier, only corporates were taking out money for cash management. Now, high net worth individuals will go for panic redemption.”

Meanwhile, the Association of Mutual Funds in India said on Friday that debt schemes of most mutual funds had “superior credit quality” and were “fairly liquid”. It called on investors to “not get side-tracked by an isolated event”. “There is no need for (investors) to panic and redeem their investments,” AMFI Chairman Nilesh Shah said in a statement. “The industry continues to remain robust.