Government has been very keen on launching exchange traded fund of PSU bank stocks in the next financial year. “We are open to the idea of floating an ETF consisting of stocks of PSU banks. We are studying the price movement of the probable stocks which could form part of the index,” the official told PTI.
This announcement comes after the government launched the Bharat-22 ETF in 2017. Previously, the government launched the CPSE ETF and both of them have seen a huge demand in investments.
The government has already raised Rs 32,000 crore through Bharat-22 ETF since 2017 and Rs 28,000 crore through CPSE ETF since 2014.
Investors have all been unsure about investing in bank stocks. But, banking stocks ETF could restore investor’s confidence in these stocks.
The official has also added that individual banks scrips may not be attractive for investors at the moment but bunching of banking stocks through ETF might see investor’s demand pick up.
Among the 20 public sector banks, the government holds 58.53 percent stake in SBI, 70.22 percent in Punjab National Bank, 70.62 percent in Canara Bank, 77.23 percent in Oriental Bank of Commerce and 83.09 percent in Bank of India.
Besides, it holds 63.74 percent in Bank of Baroda, 87.01 percent in Bank of Maharashtra and 67.43 percent in Union Bank of India.
For the year 2019-20, the government has set an ETF target of Rs 90,000 crore up from Rs 80,000 crore in 2018-19. As of now, the government has raised Rs 53,558 crore from CPSE stake sale and share buyback.
Atanu Chakraborty, Secretary in Department of Investment and Public Asset Management (DIPAM) has said that DIPAM will soon conduct a study to provide risk-free investment option to retail investors with sector-specific ETFs. He even added that ETF is not an individual share. It is an amalgamation of shares to reduce risk. DIPAM is also looking at forming a collection of shares from the same sector and create a theme-based ETF index.
