The Union Cabinet on Wednesday approved the launch of Bharat Bond Exchange Traded Fund (ETF) which will be the first corporate bond ETF in the country.
ETFs invest in a basket of securities representing an index, security or commodity and are traded on the stock exchange like any listed security.
"Bharat Bond ETF will be the first corporate bond ETF in the country," said Finance Minister Nirmala Sitharaman while addressing a press conference after the Cabinet meeting.
"It will provide additional money for Central Public Sector Units (CPSUs), Central Public Sector Enterprises (CPSEs) and other government organisations," she said. For now, it will have two maturity series -- 3 years and 10 years.
The move is part of the government's efforts to enhance depth in the bond market and draw retail investors to the debt products. The proposal was first announced by late Arun Jaitley in his Budget 2018-19 speech.