Mumbai, May 14 (IANS): Market regulator Securities and Exchange Board of India (SEBI) has issued two show-cause notices to HDFC MF on its inability to sell the pledged shares of Essel Group to repay investors.

As per SEBI, there is no provision in the MF Regulations or in the FMP scheme documents that allowed HDFC MF to adopt this course of action and this has caused losses to investors.

"... We wish to inform that the company is in receipt of two show-cause notices from Securities and Exchange Board of India dated May 10, 2019 in relation to the investments of 'Fixed Maturity Plans' of HDFC Mutual Fund in debt instruments of Essel Group of Companies," the MF firm said in a regulator filing to the exchanges.

"We are working with our legal advisors and are in the process of responding to the said show-cause notices."

The development comes as asset management companies are said to have withheld dues to holders of a FMP which matured some time back. These AMCs are belived to have taken the step owing to delay in repayments of some debt instruments issued by companies of Essel Group.

On May 7, the debt-laden Essel Group said that stake sale process of Zee Entertainment Enterprises Ltd. is at an advanced stage.