After CPSE ETF & Bharat 22 ETF, financial sector ETF coming soon

The government will set up a financial sector exchange trade fund (ETF) comprising shares of listed public sector banks, insurance companies and state run financial institutions. The department of investment and public asset management (DIPAM) on Thursday invited expression of interest (EoI) for appointment of an advisor to create this fund. 

“We had successful stints with the CPSE ETF and later Bharat 22 ETF. There is a scope for a financial sector ETF given that strength of state run banks have improved in the last one year,” an official at DIPAM said. 

In 2018-19, the government raised Rs 18,729.85 crore through Bharat 22 ETF in two tranches. It raised another Rs 26,350 crore through CPSE ETF. 

The government has raised Rs 2,350 crore against a disinvestment target of Rs 90,000 crore for the current fiscal. In 2018-19, it raised Rs 84,972.16 crore as disinvestment proceeds against the budgeted target of Rs 80,000 crore. 

Over the last five fiscal years, PSBs have been recapitalised to the extent of Rs 3.19 lakh crore, with infusion of Rs. 2.5 lakh crore by the government and mobilisation of over Rs 66,000 crore by PSBs themselves. 

As per the latest data provided by the government, bad loans for PSBs have declined by Rs 89,189 crore to Rs 8.06 lakh crore as on March 2019. Nonperforming assets of PSBs had increased to Rs 8.95 lakh crore in 2018 from Rs 2.79 lakh crore in March 2015. 

As announced in FY19 budget, government is looking to merge Oriental, National and United Insurance into one entity, keeping New India Assurance, which listed in 2017, separate. The first three are unlisted. 

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