Govt allows provident funds to invest in Bharat Bond ETFs

Manjula NR
·1 min read

The government has allowed the EPFO and Provident Fund trusts to invest money in units of public sector debt exchange traded funds (ETFs), like the Bharat Bond ETFs, as per a notification, reports LiveMint.

Bharat Bond ETF is an exchange traded fund that invests in debt of public sector companies. The ETF currently invests only in 'AAA' rated bonds of public sector companies.

The government is likely to launch the third tranche of Bharat Bond ETF this fiscal, said a PTI report.

Central public sector enterprises have fund-raising plans of about Rs 12,000 crore. The government is thinking of launching the next tranche of Bharat Bond ETF in a month or so.

The second tranche of Bharat Bond ETF, which was launched in July, was oversubscribed more than 3 times, collecting about Rs 11,000 crore. It had fetched about Rs 12,400 crore in its debut offer in December 2019.

The funds raised through debt ETF help in smoothening borrowing plans of the participating CPSEs or public sector banks. It also helps them in meeting their capital expenditure needs.

Bharat Bond ETF, which is a debt exchange traded fund, offered maturity options of 5 and 12 years in its second tranche, while in the first tranche, maturity options were for 3 and 10 years.