On Wednesday, Finance Minister Nirmala Sitharaman said that the Cabinet has cleared an umbrella bond exchange-traded fund programme, called Bharat Bond Exchange-Traded Fund. She said that it will help deepen the country's bond markets. It will be India's first bond ETF and will enable wider retail participation.
"It will be the first corporate bond ETF, which will provide additional money for PSUs as well as other government organisations," Sitharaman said while announcing the product.
What is Bharat Bond ETF?
The Bharat Bond Exchange Traded Fund will work like close-ended mutual funds and the units will be listed on stock exchanges. It will be managed by Edelweiss Asset Management and come with fixed maturity period.
Central Public Sector Enterprises (CPSEs) and public financial institutions will be a part of the bond ETF.
The scheme will be offered with two options, one maturing in three years (by 2023) and the other in 10 years (by 2030). It will come with only growth option and no dividend option.
The unit value of the bond will be capped at Rs 1,000. Two tranches of the Bharat Bond ETF will be rolled out every year.
These could be bought or sold at a stock exchange or from an asset management company.