The centre is setting up a new ETF or exchange traded fund which may include State Bank of India, Bank of Baroda and Punjab National Bank. The new ETF shall be rendered more attractive with a basket of stocks of large banks.

Finance Ministry official said, "We are not sure about insurance companies yet but some of the listed financial institutions such as IFCI could also be considered". The new ETF being set up by the department of public investment and management (DIPAM) will mull over all the available options before arriving at the final decision. The government has 57.97% stake in SBI, 59.2% in BOB and 65% in PNB.

Further reiterating, the official said that the move shall not impact the capital raising plan of the entities. Also "since there is not going to be considerable equity dilution through the ETF route, we don't foresee any issue with larger banks being part of the new structure".

The first and foremost CPSE or Central Public Sector Enterprises ETF that was set up in the year 2014 included 10 companies which are Oil and Natural Gas Corp. (ONGC), Indian Oil Corp. (IOC), Coal India, Container Corporation of India, GAIL (India), Bharat Electronics, Oil India, Rural Electrification Corp. (REC), Engineers India Ltd and Power Finance Corp. (PFC). The further fund offer or FFO of the CPSE-ETF was rolled out in March.

The new ETF will have a mix of stocks along with the stocks from the financial sector. As reported by the government official, he also said "We will also look at some of the newly-listed CPSEs". he said. Further, "it may take another three three months to come out with an ETF, which will give a diversified offering and is predominantly attractive for retail investors".

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