Fund to ‘Backstop’ Corporate Debt Market

On 17th February, 2023, India decided to set up a fund worth 330 billion rupees to provide liquidity to its corporate debt market. The purpose is to help stem panic selling and ease redemption pressures.

Contribution

  • The government will provide 90% of the money for the fund, and other asset managers would contribute the rest 10%.
  • SBI Mutual Fund, a unit of India's largest state-owned lender, State Bank of India, has been tasked with administrating the backstop fund, which was first proposed by the Securities and Exchange Board of India (SEBI) in 2020 after high-profile defaults rocked the domestic debt market.

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