Cabinet approves exchange traded fund for bonds

After exchange traded fund for equities, the Union Cabinet on Wednesday approved launch of a exchange traded fund for bonds.

The fund will provide additional money for state-owned firms and other government organisations, Finance Minister Nirmala Sitharaman said.

Bharat Bond Exchange Traded Fund would be the first corporate bond ETF in the country.

ETF will be basket of bonds issued by state firms or any government organisation, and bonds will be tradable on exchange, she said adding that the unit size will be of Rs 1,000, allowing small investors to invest.

Each ETF to have fixed maturity date and will track underlying index on risk replication basis, she said adding that for now it will have two maturity series -- 3 and 10 years.