The Ministry of Finance will be launching an ETF (exchange-traded fund) with stocks of public sector banks and financial institutions in this fiscal year 2019-20, a PTI report said, citing an official. The ministry will be appointing an advisor to explore the feasibility of the same, it said.
The Indian government is looking to diversify its basket of ETFs that includes earlier successes of CPSE ETF and Bharat-22 ETF. The plan to launch a banking centric ETF comes after the huge demand seen for the two existing ETFs. It raised Rs 32,900 crore through Bharat-22 ETF and Rs 38,000 crore in five tranches of CPSE ETF in the domestic market.
The official told PTI that the government expects the balance sheets of PSU banks to strengthen going forward. Further, the new ETF would allow risk-averse investors to hold shares of multiple banks through a single financial instrument.
Currently, there are 19 public sector banks listed on the stock exchanges. There are also two insurance companies, General Insurance Corp of India and New India Assurance Co and financial institution IFCI (Industrial Finance Corporation of India) that are listed on the Indian stock exchanges.
The Ministry has also starting seeking consultations with global investors to launch CPSE (Central Public Sector Enterprises)-scrip based ETF in the international market.
The government has budgeted to collect Rs 90,000 crore through CPSE disinvestment in the current fiscal as against Rs 84,972 crore mopped up in 2018-19.