The cabinet today approved the launch of the Bharat Bond Exchange Fund in an effort to strengthen the bond market and boost retail participation.
Bharat Bond ETF will be a basket of bonds issued by central public sector enterprises (CPSEs) and other government financial institutions. ETF is an investment fund traded on exchanges like stocks and holds assets such as stocks, commodities or bonds.
This move will open the window for retail investors to invest in bonds with a smaller amount (as low as Rs.1,000) thereby providing easy and low-cost access to bond markets.
N S Venkatesh, chief executive of AMFI said "It's a historic occasion for retail investors as also for the Indian corporate bond market for retail investors as they would now be able to invest in an altogether new liquid avenue in quality public sector bonds through the very low-cost ETF structure. And for the economy, as country's first exchange-traded bonds belonging to quality public sector enterprises bundled in an liquid low-cost ETF structure, would help in deepening and widening participation in the Indian corporate bond market".
Edelweiss AMC is said to have received government approval to launch a debt ETF soon.
