Strengthening Indian Bond Market: Govt Gears Up To Launch Second Tranche Of Bharat Bond ETF This Quarter

In a major boost for the deepening and developing bond market of India, the Union Ministry of Finance is set to unveil the second tranche of the Bharat Bond exchange traded fund (ETF) in the present quarter, reports Livemint.

The development comes after the first trance of the Bharat Bond ETF launched in December became a runaway success, being subscribed by investors of varied kinds by 1.8 times. The ETF which had been launched with the base size of Rs 7,000 crore had ended up mopping Rs 12,400 crore.

The Bharat Bond ETF acts as an additional source of funding for Central Public Sector Undertakings (CPSUs), Central Public Sector Enterprises (CPSEs), Central Public Financial Institutions (CPFIs) and other government organisations. It also provides a better opportunity to retail investors for participation in quality public sector bonds at an affordable cost.

This mechanism of fund raising did not exist prior to December and was the brainchild of the Ministry led by Union Minister of Finance Nirmala Sitharaman.

It should be noted that Sitharaman had also talked about efforts to deepen the bond markets in her speech while tabling the Union Budget for 2020-21, during which she had also raised the limit for foreign portfolio investors (FPIs) to invest in corporate bonds from the present nine per cent to 15 per cent.