Capital markets regulator Sebi plans to come up with a framework to encourage more exchange-traded funds into debt securities to boost retail investor interest in the market, a senior official said Thursday.
The regulator wants to replicate history as seen in the equity segment, where ETFs and index funds have deepened retail investor participation in the markets, said Sebi full member Ananta Barua.
“There is a push. We will come up with a framework that will encourage more ETFs in debt securities and index funds,” Barua said, speaking at a corporate bond development event hosted by the Assocham industry lobby.
Barua said Sebi is also planning to implement other measures as announced in the annual budget by Finance Minister Nirmala Sitharaman.
He expressed satisfaction with the development of the bond market, saying that total issuance amounted to more than 16 percent of GDP in the last fiscal year, after a slow start.
Sebi has established all the necessary frameworks to raise funds in the bond market, including newer instruments like municipal bonds and green bonds, Barua said.
He said the overall bond outstanding stood at Rs 40.17 lakh crore at the end of FY22 compared to Rs 36 lakh crore a year ago.
There is a need to attract retail investors to bond markets, he said, adding that the new framework is in the works.
Barua also mentioned venture debt as an attractive instrument, suggesting that startups, especially those who were sponsors, are not willing to dilute their holdings or those who want working capital support should consider this route. for their financing needs.