Centre opts for ETF to sell PSUs

Bharat 22 will consist of 22 stocks of CPSEs, PSBs and strategic holdings

Finance minister Arun Jaitley on Friday announced setting up of a new exchange-traded fund (ETF) to be called Bharat 22 to sell government stakes in 22 state-run and private firms under its $11.4 billion asset sale programme.

Bharat 22 will consist of 22 stocks of CPSEs, public sector banks and strategic holding of SUUTI.

“While selecting each of these sectors, we have kept in mind sectoral reforms which have had direct impact on the valuation of these shares... We believe that this ETF will be a fairly successful one,” Mr Jaitley said.

The government will sell shares, through the fund, in utilities like Power Grid Corp, NTPC, Gail, NHPC, NLC and SJVN. The oil and gas and coal and mine PSUs whose scrips figure in the new ETF are ONGC, IOC, BPCL, Coal India and Nalco.

Only three PSU banks — SBI, Indian Bank and Bank of Baroda — figure in the Bharat-22 index. Also, the government holding in Axis Bank, ITC and Larsen and Toubro held through SUUTI is also part of the ETF basket.

This will be the second ETF from the government after it raised over `8,509 crore from three tranches of CPSE ETF.

Compared to energy heavy CPSE ETF, Bharat 22 is a diversified portfolio with six sectors (basic materials, energy, finance, FMCG, industrials and utilities).

The Bharat 22 Index will be rebalanced annually. ICICI Prudential AMC will be the ETF Manager and Asia Index Private Limited (JV BSE and S& P Global) will be the Index Provider.

In the Budget speech of 2017-18, Mr Jaitley had promised to use ETF as a vehicle for further disinvestment of shares. The target for CPSE’s disinvestment in FY18 was set at `72,500 crore.

During the current fiscal, the Centre has realised around `9,300 crore through nine disinvestment transactions so far.

In an unrelated development, Mr Jaitley informed Parliament that there are no regulations governing virtual currencies, including bitcoins, in India at present and the RBI has not given any licence to any entity/company to operate such schemes.

“At present, there are no regulations governing VCs including Bitcoin (BTC) in India. Further, RBI has advised that it has not given any licence to any entity/company to operate such schemes or deal with Bitcoin or any virtual currency,” Mr Jaitley said.

The minister further said that taking cognisance of concerns raised at various fora from time to time on increasing use of virtual currencies and the regulatory challenges, the Department of Economic Affairs (DEA) has constituted a committee on virtual currencies