Sebi mulling framework to encourage more ETFs in debt segment: Ananta Barua

Sebi's Wholetime Member Ananta Barua said Sebi is also looking at implementing other measures as announced in the annual budget by Finance Minister Nirmala Sitharaman.

Capital markets regulator Sebi is planning to come out with a framework to encourage more exchange-traded funds in debt securities to increase retail investors' interest in the market, a senior official said on Thursday.

The regulator wants to replicate the story as seen in the equity segment, where the ETFs and index funds have deepened retail investors' participation in the markets, Sebi's Wholetime Member Ananta Barua said.

"there is a thrust. We will come up with a framework which will encourage more ETFs in debt securities and index funds," Barua said, speaking at an event on corporate bond development conducted by industry lobby Assocham.

Barua said Sebi is also looking at implementing other measures as announced in the annual budget by Finance Minister Nirmala Sitharaman.

He expressed satisfaction with the bond market development, saying the total issuances came at over 16 per cent of the GDP last fiscal from a slow start.

Sebi has laid down all the necessary frameworks for raising money from the bond market, including newer instruments like municipal bonds and green bonds, Barua said.

He said the overall outstanding bonds had stood at Rs 40.17 lakh crore at the end of FY22 against Rs 36 lakh crore in the year-ago period.

There is a need for pulling in the retail investors towards the bond markets, he said, adding the new framework is in the works.

Barua also mentioned venture debt as an interesting instrument, hinting that startups, especially those were promoters, are unwilling to dilute their holdings or those wanting working capital support should look at this route for their funding requirements.