MUMBAI - India's markets regulator has approved a fund to backstop the corporate debt market for buying ill-liquid and investment grade debt paper, it said on Wednesday. In February, Reuters had reported that India is setting up a fund worth 330 billion rupees ($4 billion) to provide liquidity to its corporate debt market during bouts of stress, to help stem panic selling and ease redemption pressures.

Finance Minister Nirmala Sitharaman announced last year that the government had taken up the Securities and Exchange Board of India's proposal for the fund, without giving details.

(Reporting by Jayshree P. Upadhyay; Editing by Nivedita Bhattacharjee)