{"id":13530,"date":"2023-07-29T08:30:51","date_gmt":"2023-07-29T03:00:51","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=13530"},"modified":"2025-04-02T05:08:05","modified_gmt":"2025-04-01T23:38:05","slug":"corporate-debt-market-development-fund-cdmdf","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/corporate-debt-market-development-fund-cdmdf\/","title":{"rendered":"Corporate Debt Market Development Fund (CDMDF)"},"content":{"rendered":"<h2><strong>About Corporate Debt Market Development Fund:\u00a0<\/strong><\/h2>\n<p>&nbsp;<\/p>\n<ul>\n<li>It is a <strong>backstop facility for specified debt funds<\/strong> during market dislocations.<\/li>\n<li>The fund is intended to <strong>provide liquidity support<\/strong> in the event of a financial crisis.<\/li>\n<li>It will be in the form of an alternative investment fund (AIF), meant to instill confidence among the participants in the Corporate Bond Market during times of stress<\/li>\n<li>The fund has <strong>Rs 33,000-crore backstop facility<\/strong> for Mutual Funds.<\/li>\n<li>Of the Rs 33,000 crore, Rs 30,000 crore will come from the government, while the balance <strong>Rs 3,000 crore<\/strong> will be contributed <strong>by the Asset Management Companies.<\/strong>\u00a0<\/li>\n<li>Contributions to the fund can be done by the <strong>specified debt-oriented mutual fund<\/strong> schemes and <strong>asset management companies<\/strong> of mutual funds.<\/li>\n<li>This fund is guaranteed by the <strong>National Credit Guarantee Trust Company (NCGTC<\/strong>) and the backstop facility <strong>will be managed by SBI Mutual Fund.<\/strong><\/li>\n<li><strong>Who can invest?<\/strong>\n<ul>\n<li>Specified <strong>debt-oriented mutual fund schemes<\/strong> here are \u2018open-ended debt oriented mutual fund schemes, excluding the overnight funds and gilt funds and including conservative hybrid fund\u2019.<\/li>\n<li>These specified debt-oriented <strong>schemes will invest 25 basis points<\/strong> (0.25 per cent) of their <strong>asset under management<\/strong> (AUM) in CDMDF units and will increase their contribution when their AUM increases and review it every six months.<\/li>\n<li>However, there will be no redemption from CDMDF in case their AUM reduces.<\/li>\n<li>The same applies to the specified schemes of new mutual funds or such new schemes from the existing mutual funds.<\/li>\n<li>The AMCs are also required to <strong>make a contribution of 2 per cent of<\/strong> their specified debt-oriented schemes\u2019 AUM as a one-time contribution.<\/li>\n<li>The initial contribution for this purpose will be based on the AUM as of December 31, 2022, in the specified schemes of the mutual funds.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3>\u00a0<\/h3>\n<h3>What is a Backstop facility?<\/h3>\n<ul>\n<li>A backstop is an <strong>act of providing last-resort support or security<\/strong> in a securities offering for the unsubscribed portion of shares.<\/li>\n<li>When a company is trying to raise capital through an issuance, it may get a backstop <strong>from an underwriter or a major shareholder, such as an investment bank<\/strong>, to buy any of its unsubscribed shares.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3>Q1)\u00a0What is a mutual fund?<\/h3>\n<p>A mutual fund is a type of investment vehicle that pools money from multiple investors to invest in a diversified portfolio of stocks, bonds, money market instruments, and other securities. It is managed by a professional fund manager or a team of managers, who make investment decisions on behalf of the investors.<\/p>\n<p><strong>Source:<\/strong>\u00a0<a href=\"https:\/\/pib.gov.in\/PressReleaseIframePage.aspx?PRID=1943686\" target=\"_blank\" rel=\"nofollow noopener\"><u>Union Finance Minister Smt. Nirmala Sitharaman launches the AMC Repo Clearing Limited (ARCL) and Corporate Debt Market Development Fund (CDMDF)<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Corporate Debt Market Development Fund (CDMDF) is a backstop facility for specified debt funds during market dislocations.<\/p>\n","protected":false},"author":5,"featured_media":13531,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-13530","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/13530","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=13530"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/13530\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/13531"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=13530"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=13530"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=13530"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}