No leverage /credit facility is required and the capital of Rs. 3088 crs mentioned above would remain invested in liquid and low-risk debt instruments such as

• Low duration Government Securities (“G-Sec”)
• Treasury bills (“T-bills”)
• Tri-party Repo on G-sec 
• Guaranteed corporate bond repo with maturity not exceeding 7 (seven) days etc.

Further, the Fund may also be permitted to undertake various activities related to the corporate debt market including repo, Securities Lending and Borrowing Mechanism (“SLBM”), AAA debt securities etc., as may be permitted by SEBI from time to time, subject to suitable risk management measures.(“Normal Investments”);

• Once the market dislocation is declared by the regulator, the IM would liquidate CDMDF’s existing portfolio created during the normal times. The credit facility from the banks would be used, and the overall cash available (capital from units’ holders plus credit from banks) can be deployed in the corporate bond market.
• Only investment grade credit instruments including listed money market instruments to be bought by the Fund from the specified open- ended debt schemes of mutual funds, where there is liquidity stress in the market, but the credit quality is good. There are also prudential norms prescribed by the regulator which the Fund would follow in terms of buying of debt securities i.e., not more than 5% of the amount available (Fund Capital i.e., corpus plus maximum permissible leverage) with single issuer and not more than 7.5% with issuers from the same group.
• The basis allocation of the purchase consideration would be based on the capital contributed by each Mutual Fund House
• Any investment bought during the market dislocation should not have a residual life of more than 5 years and should be listed. 
• Though the Fund is authorized to buy only investment grade credit instrument in case there is some unforeseen loss then the first loss is to be absorbed by the specified open-ended debt schemes who sold the instrument, to an extent of 10% of the purchase consideration which would be retained by the Fund (in form of their subscription to units of CDMDF) while purchasing securities. Such retention of 10% of purchase consideration would be under a common pool of capital and would be represented by a separate class of unit capital (A3 Unit class).Post that if there is further loss (if any), it must be borne by the capital contributors (A1 and A2 Unit Class i.e Rs. 3088 crs of capital contribution mentioned above).