State Bank of India on Tuesday said it will set up a new trustee company as its wholly-owned subsidiary for managing the Corporate Debt Market Development Fund (CDMDF).
CDMDF will act as a backstop facility for purchase of investment grade corporate debt securities to instill confidence amongst the participants in the corporate bond market during times of stress and to generally enhance secondary market liquidity by creating a permanent institutional framework for activation in times of market stress.
SBI Funds Management Ltd (SBIFML), the asset management company (AMC) of SBI Mutual Fund, has been identified as the investment manager-cum-sponsor of CDMDF, India’s largest bank said in a regulatory filing. SBI has 62.53 per cent stake in SBIFML.
The setting up of the Fund, which will be classified as an Alternative Investment Fund (AIF) under the SEBI (Alternative Investment Funds) Regulations, 2012, is subject to receipt of all regulatory approvals.
Close ended scheme
CDMDF will be launched as a close ended scheme with an initial tenure of 15 years from the date of its initial closing (date on which contribution from all AMCs and specified schemes is received by CDMDF), according to SEBI.
Based on the requirements of the corporate bond market, the tenure can be extended with prior approval of the government in consultation with SEBI subsequent.
To begin with, units of CDMDF shall be subscribed by Asset Management Companies (AMCs) of Mutual Funds and “specified debt-oriented MF Schemes” (that is Open ended Debt oriented Mutual Fund schemes excluding Overnight funds and Gilt funds and including Conservative Hybrid funds).
SBI’s wholly-owned investment banking subsidiary SBI Capital Markets also has a wholly-owned subsidiary SBICAP TRUSTEE CO. Ltd (STCL).
SBICAP TRUSTEE CO. LIMITED (STCL) STCL is a wholly-owned subsidiary of SBI Capital Markets Limited. STCL commenced the Security Trustee business on 1st August 2008.
The company acts as a security trustee to the lenders for corporate and project finance loans. It performs the role of a debenture trustee for the debentures /bonds issued by corporates, banks, PSUs and municipal corporations. It is registered with SEBI as a debenture trustee.
STCL also provides other related services such as share pledge trustee, escrow trustee, AIF trustee and ESOP trustee, among others.