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Informist, Tuesday, May. 5, 2025

 

--Fin min source: To soon approach PSUs for Bharat Bond ETF issuance in FY26

--Fin min source: Want to add 2028, 2035 indices to Bharat Bond ETF series

 

By Krity Ambey

 

NEW DELHI – The government is likely to soon approach public sector undertakings to gauge their interest in raising resources through the Bharat Bond Exchange Traded Fund in 2025-26 (Apr-Mar), a finance ministry official said. The government will take stock of PSUs' fund requirements and the tenure of papers that are suitable for them, the official added.

 

The government wants to add new indices--maturing in 2028 and 2035--to the Nifty Bharat Bond Index series, according to the official. "But a final decision will be reached only after discussing with the PSUs," the official told Informist. Currently, the Nifty Bharat Bond series has four indices maturing in 2030, 2031, 2032, and 2033.

 

The government had issued the last tranche of the Bharat Bond ETF in FY23, before the Union Budget for FY24 tweaked the tax structure for income from debt mutual funds. The corporate bond market became an unintended casualty of the government's move to withdraw capital gains tax as well as indexation benefit on debt mutual funds in the Budget for FY24.

 

"But we have not given up on Bharat Bond. It is a good instrument, and if PSUs show interest, we will definitely go ahead with the issuance this year," the official said. 

 

As per FY24 Budget, starting Apr. 1, 2023, the government has begun levying tax on income from debt mutual funds as per the individual's income tax slab rate. Earlier, the government levied 12.5% long-term capital gains tax on income from debt mutual funds held for over two years, and also allowed indexation benefit to investors. 

 

The Bharat Bond ETF was initiated by the government in 2019 to streamline borrowing requirements of public sector companies by pooling investments from retail and institutional investors and also to develop a thriving corporate bond market. The ETF, managed by Edelweiss Asset Management Co., had INR 555.14 billion worth of assets under management as of Apr. 30, as per the fund manager. 

 

Bharat Bond ETF is an open-ended exchange-traded debt fund which invests in bonds issued by constituents of the Nifty Bharat Bond Indices, consisting of 'AAA'-rated public sector companies.  End

 

Edited by Tanima Banerjee

 

 

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