Narendra Modi Cabinet approves Bharat Bond Exchange Traded Fund Launch.
Prime Minister Narendra Modi – Union government on Wednesday approved the launch of the first corporate bond ETF in the country, bond exchange-traded fund (ETF) programme, called Bharat Bond.
Under this, the Central government is aiming to strengthen the country’s bond market and boost retail investor participation.
As per the statement issued by the Union Finance Minister Nirmala Sitharaman on Wednesday, the Bharat Bond ETF would be a basket of bonds which the central public sector enterprises (CPSEs) would issue.
They would then be invested or traded on the stock exchange like any security listed on the exchange in a portfolio of bonds of CPSE, CPSU, CPFI or any other government organisation
Top 9 Features of Bharat Bond ETF, According to the Government:
1) Bharat Bond ETF would help the government generate an additional source of funding — apart from bank financing — to the government companies, financial institutions and other organisations.
2) It would be the country’s first debt-based ETF, which would follow the launch of two equity-based ETFs by the government.
3) Sitharaman informed that Bharat Bond ETF would help deepen the country’s bond markets. It has been launched after receiving a good response from investors on the equity-based Bharat 22 ETF in 2014.
4) Bharat Bond ETF would provide investors safety, liquidity and predictable tax-efficient returns.
5) Easy and low-cost access to bond markets would help retail investors participate in the development of the nation.
6) Bharat Bond ETF would be available for Rs 1000 for the retail investors, who restrain to participate in the bond markets due to liquidity and accessibility constraints.
7) The debt-based ETF would have a fixed maturity date, starting with two maturity series — three years and 10 years — which would be constructed by the NSE.
8) The minimum ticket size for large investors will be Rs 25 crore. However, market makers need to have an ETF inventory worth Rs 1 crore to be able to participate.
9) The fund would provide additional money for CPSUs, CPSEs and other government organisations.