ETF for bonds gets approval, it is likely to hit the market this month

NEW DELHI: After the stock exchange negotiated fund, the Cabinet approved on Wednesday the launch of the stock exchange negotiated fund (ETF) for bonds to create an additional source of financing for Central Public Sector Companies (CPSE) and financial institutions state.

The new fund offer (NFO) of this ETF is expected to be launched during the same December. Bharat Bond ETF would be the first ETF in the country. With the creation and launch of the umbrella ETF, we hope to diversify the investor base, FM told reporters after the Cabinet approved the ETF bond in principle.

It will help deepen the bond market as announced in the Budget, he said. The ETF will be a basket of bonds issued by state-owned companies or any government organization, and will be negotiable in return, he said, adding that the unit's size will be Rs 1,000, which will allow small investors to invest.

He said that each ETF will have a fixed expiration date and will track the underlying index, he said, adding that for now it will have two expiration series, 3 and 10 years, with a low cost of 0.0005%. This will increase the participation of retail investors who currently do not participate in bond markets due to liquidity and accessibility restrictions, FM added. Speaking to reporters, the secretary of the Department of Public Asset Management (DIPAM), Tuhin Kanta Pandey, said: we hope to launch the NPO during the month.

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