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Union Cabinet approves Bharat Bond, country's first bond exchange-traded fund

Union Cabinet approves Bharat Bond, country's first bond exchange-traded fund

India Blooms News Service | @indiablooms | 04 Dec 2019, 10:10 am

New Delhi/IBNS: The Union Cabinet on Wednesday approved the first exchange-traded fund bond, called Bharat Bond, aimed at strengthening country's bond market and encouraging retail participation, the Finance Minister said on Wednesday.

The ETF will comprise bonds issued by the central public financial institutions(CPFIs), central public sector enterprises (CPSEs), central public sector undertakings(CPSUs) or any government organisation, said Nirmala Sitharaman.

The fund will be a source of additional money for the government organisations participating in the programme.

As such the ETFs are a basket of securities representing an index, commodity or security. Like any other security listed on the stock exchange, the ETFs are traded on the bourses.

Investors will be able to invest in the Bharat Bonds starting from Rs 1,000 per unit. They can buy and sell their units without having to wait for the maturity period, said Sitharaman.

Each ETF will have a maturity period of 3 years or 10 years, for now. Large investors can participate in ETFs through asset management companies and market makers. The minimum ticket size for large investors has been marked at Rs 25 crore, the Finance Minister stated.

The asset management companies must have an ETF inventory equivalent to Rs 1 crore, to be able to participate in Bharat Bond, she added.