SEBI clarifies that Corporate Debt Market Development Fund is Cat - I AIF

Though a separate framework has been laid down for CDMDF under chapter III-C of Regulation 19 of AIF Regulations, the fund has been classified as Cat I - AIF, said the circular.

The market regulator has clarified that the Corporate Debt Market Development Fund (CDMDF) has been classified as Category I Alternative Investment Fund (AIF).

The fund was set up as a backstop facility to provide liquidity to debt funds when there is an event that causes a surge of redemptions. The fund was set up as an AIF with a Rs 3,000 crore corpus, to purchase investment grade corporate bonds when there is stress in the market.

In the circular issued on Friday, December 13, the Securities and Exchange Board of India (SEBI) said that it had received representation to provide clarity on classification of CDMDF under one of the defined categories under the AIF Regulations.

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The circular said, "While a separate framework has been laid down for CDMDF under chapter III-C of Regulation 19 of AIF Regulations, the fund has been set-up with the broader economic objective of development of corporate bond market, inter-alia, to act as a Backstop facility during times of market stress. In view of the above, it is clarified that CDMDF falls under Category I AIF in terms of Regulation 3(4)(a) of AIF Regulations."

The government has allowed a 10x usage of this corpus to be availed taking the available fund to Rs 33,000 crore and this additional corpus is also guaranteed by the central credit guarantee corporation.