Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Bharat Bond ETF
What to study?
For Prelims: What is Bharat Bond ETF?
For Mains: Features and significance.
Context: The government has approved the launch of Bharat Bond ETF, India’s first corporate bond exchange traded fund, comprising debt of state-run companies.
- This move will allow retail investors to buy government debt.
- It will provide retail investors easy and low-cost access to bond markets, with smaller amount as low as ₹1,000.
- They will provide tax efficiency as compared to bonds, as coupons (interest) from the bonds are taxed depending on the investor’s tax slab.
Key features of Bharat Bond ETF:
- It is a basket of bonds issued by central public sector enterprises/undertakings or any other government organization bonds.
- It will have a fixed maturity of three and ten years and will trade on the stock exchanges.
- It will invest in a portfolio of bonds of state-run companies and other government entities.
- It will track an underlying index on risk replication basis, matching credit quality and average maturity of the index.
- The index will be constructed by an independent index provider, National Stock Exchange.