Bharat Bond ETF

About Bharat Bond ETF

What is Bharat Bond ETF

In a move aimed at strengthening the corporate bond market and reducing the cost of borrowing, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, approved the creation of Bharat Bond Exchange Traded Fund (ETF) on December 4, 2019. This will be India's first corporate bond issued by state-run companies to be traded on bourses.

What will Bharat Bond ETF do?

A basket of bonds issued by public-sector companies or any government organisation, Bharat Bond ETF will be tradable on the stock exchange. Announcing the development, Finance Minister Nirmala Sitharaman said the unit size of these bonds, of Rs 1,000, will allow small investors to put their money with a fixed maturity date. As of now, the bond will have two maturity series — three years and 10 years, with each series having a separate index of the same maturity series.

The ETF will be launched every six months and the index will be constructed by the National Stock Exchange (NSE) as an independent index provider. Edelweiss Asset Management will launch the first tranche, but there will be other tranches for which other asset managers may be appointed. A K Capital Services is the sole advisor to the government for the debt ETF.

The move will help public-sector companies raise funds through debt instruments and further develop domestic capital markets, boosting alternative sources of funding for firms, even as a series of corporate defaults keep banks and shadow lenders wary. This will also increase the participation of retail investors who are currently not participating in bond markets due to liquidity and accessibility constraints.

Stating that the Bharat Bond ETF would be the first corporate bond ETF in the country, the finance minister said: "With the creation and launch of umbrella ETF, we hope to diversify the investor base. It will provide safety, liquidity (tradability on exchange) and predictable tax-efficient returns (target maturity structure) to the investors."

What are ETFs?

Over the years, ETFs have become a popular investment vehicle for investors, allowing them to invest in a diverse collection of assets. According to the government estimates the Employees Provident Fund (EPFO) has invested about Rs 87,000 crore in ETFs.

Latest Updates on Bharat Bond ETF

Bharat Bond ETF oversubscribed 6 times against base size of Rs 1,000 crore

The funds raised through the debt ETF helps in smoothening borrowing plans of the participating CPSEs or public sector banks

Updated On: 10 Dec 2021 | 1:24 AM IST

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Bharat Bond ETF second tranche worth Rs 14,000 cr to hit market in mid-July

In December, 2019, Bharat Bond ETF mobilised Rs 12,400 crore

Updated On: 29 May 2020 | 1:40 PM IST

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Passive global funds, algos may have magnified market crash

ETFs are similar to index funds, except that these may be bought and sold on the exchanges. They're preferred by institutional investors

Updated On: 17 Mar 2020 | 12:18 PM IST

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Understanding Budget policy

Its objectives are clear. But the reality in recent years has not cooperated with the government's plans

Updated On: 28 Feb 2020 | 9:53 AM IST

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Brokerages eye ETF play to take advantage of the rising investor interest

Instead of just focusing on earning brokerage selling ETFs, broking houses are also considering packaging multiple ETFs as part of a more customised advisory service offering multiple asset exposure

Updated On: 24 Jan 2020 | 11:15 PM IST

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Bharat Bond ETF debuts at the NSE, trades above Rs 1,000

Last month, the ETF saw an oversubscription of 1.7 times, garnering Rs 12,000 crore which is likely to be utilised for capital expenditure (capex) of PSUs.

Updated On: 02 Jan 2020 | 2:56 PM IST

India's first corporate bond ETF garners Rs 12,400 cr from its maiden offer

The funds raised would be utilised for capex of PSUs. The base size of the issue was Rs 7,000 crore

Updated On: 24 Dec 2019 | 10:59 PM IST

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Bharat Bond ETF anchor book over-subscribed 1.7 times; LIC also places bids

Fund could later look at instruments rated below the top-grade, if there is demand

Updated On: 12 Dec 2019 | 10:18 PM IST

Edelweiss launches maiden corporate bond ETF, aims to raise Rs 15,000 cr

This ETF is an initiative of the department of investment and public asset management and the latter has given the mandate to Edelweiss AMC to design and manage the product

Updated On: 12 Dec 2019 | 8:30 PM IST

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What makes Bharat Bond ETFs a good option for buy-and-hold investors

Holding them till maturity will take care of interest-rate and liquidity risks that may exist

Updated On: 15 Dec 2019 | 1:30 PM IST

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Cabinet gives approval to Bharat Bond ETF, launch in early January

Bharat Bond ETF will be made of AAA-rated papers issued by govt-linked firms

Updated On: 06 Dec 2019 | 6:10 PM IST