SEBI sets 20 % limit for gold ETFs' investments in banks' gold deposit schemes

Investments by gold exchange traded funds of mutual funds in gold deposit schemes (GDS) of banks should not exceed 20 per cent of total asset under management of such schemes, as per the revised guidelines of the Securities and Exchange Board of India (SEBI).

The total investment of gold ETFs in GDS should not exceed 20 per cent of the total asset under management of such schemes, SEBI said in a notification.

SEBI also made it mandatory for mutual funds to put in place a draft policy with regard to investment in GDS with due approval from the board of the asset management company concerned and its trustee before making investments in GDS of banks.

Also, the policy should provide for mutual funds obtaining prior approval of their trustees for each investment proposal in GDS of any bank.

Mutual funds should review the policy at least once a year.

SEBI has also directed mutual funds that gold certificates issued by banks in respect of investments made by these gold ETFs in GDS should be held only in dematerialised form.