The Government on Thursday approved the setting up of a CPSE Exchange Traded Fund (ETF) which is expected to speed up disinvestment programme, check volatility in share price movement and encourage retail participation.
"(The ETF) comprise CPSE stocks (from amongst the listed CPSE stocks). Each stock would have a fixed weightage in the basket," an official statement said. The proposal was cleared by Cabinet Committee on Economic Affairs (CCEA) headed by the Prime Minister.
The composition of the basket, the launch of the New Fund Offer (NFO), the discount to be provided and other issues relating to contribution and pricing of the ETF would be decided by the Empowered Group of Ministers (EGoM), it added.
"This will help in minimising market disruptions seen in public offerings of listed CPSEs; increase ability of the government to monetise partial stakes in listed CPSEs, some of which have low liquidity and free float; broad base retails participation of shares of CPSEs...," it said.
The ETF is also expected to deepen the equity market and will be beneficial to government from a pricing perspective.