Sebi allows gold ETFs to invest in Gold Deposit Schemes

Market regulator Sebi today allowed gold Exchange Traded Funds (ETFs) to invest in gold

RELATED ARTICLES

deposit schemes of banks, as part of overall efforts to utilise idle assets of the precious metal for more productive purposes.

Securities and Exchange Board of India (Sebi) has allowed gold ETFs of mutual funds to invest in Gold Deposit Scheme (GDS) of banks, subject to certain conditions including that the "total investment in GDS will not exceed 20 per cent of total asset under management of such schemes".

A RBI panel has estimated that about 20,000 tonnes of idle gold is lying with the people. The central bank wants to channelise the idle gold for productive purposes and also check the demand for imports.

As per Sebi guidelines, before investing in GDS, mutual funds would have to put in place a written policy related to the investment with due approval from the Board of the Asset Management Company and the Trustees.

"The policy should have provision to make it necessary for the mutual funds to obtain prior approval of their trustees for each investment proposal in GDS of any Bank," Sebi said in a circular.

Further, the policy has to be reviewed by mutual funds, at least once a year.

"Gold certificates issued by Banks in respect of investments made by Gold ETFs in GDS shall be held by the mutual funds only in dematerialised form," the circular said.

Last month, the Finance Ministry had announced plans to link gold ETFs of mutual funds with gold deposit schemes of banks with a view to increase domestic availability of physical gold.

Rising gold imports have been a major concern for the government as it contributes substantially to the widening Current Account Deficit (CAD) -- the difference between the inflow and outflow of foreign currency.

Gold imports till December stood at $38 billion. In 2011-12 fiscal, its import stood at $56.5 billion.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • But what’s the big deal about Modi’s first hundred days?

    That Indians believe more in symbolism than substance is a fact that is well acknowledged and chronicled.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Urs Schöttli

West Asia turmoil worries east Asia

From Beijing to Jakarta, from Manila to Tokyo, east Asian ...

Purnendu Ghosh

Memory is a collage of the old and new

We are all fitted with pressure valves. Some of us ...

Shona Adhikari

The enduring legacy of <em>The Last Supper</em>

This week’s column features a work of art that is ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture