Cabinet Approves Launch Of Bharat Bond Exchange Traded Fund

The Union Cabinet has cleared the launch of the Bharat Bond exchange traded fund (ETF). The ETF has been launched with the aim to deepen the bond market as it will allow retail investors to participate. "Umbrella bond ETF will diversify investor base" as we promised in the Budget, for creating an opportunity for the general public to participate in the bond market", Finance Minister Nirmala Sitharaman told reporters here after a cabinet meeting.

The fund will provide additional money for state-owned firms and other government organisations, Finance Minister Nirmala Sitharaman said. Bharat Bond Exchange Traded Fund would be the first corporate bond ETF in the country.

ETF will be basket of bonds issued by state firms or any government organisation, and bonds will be tradable on exchange, she said adding that the unit size will be of Rs 1,000, allowing small investors to invest.

Each ETF to have a fixed maturity date and will track underlying index on risk replication basis, she said adding that for now it will have two maturity series - 3 and 10 years. Gold ETFs manage around Rs 5,800 crore. A debt ETF is a collection of such corporate debt paper, where the maturity duration of these bonds are close to each other.

With Agency Inputs