The Securities and Exchange Board of India (SEBI) on Friday allowed Gold Exchange Traded Fund schemes (Gold ETFs) to invest in Gold Deposit Schemes (GDS) of banks, as the Reserve Bank of India (RBI) changed the maturity period of gold deposits, from six months to seven years instead of three to seven years making the product more attractive for investors.
“The total investment in GDS will not exceed 20 per cent of total asset under management of Gold ETFs,” said SEBI in a circular to asset management companies (AMCs).
Before investing in GDS of banks, mutual funds shall put in place a written policy with regard to investment in GDS with due approval from the Board of the AMCs and the Trustees.
Further, SEBI said that this policy would 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 dematerialized form,” it added.
While changing the maturity period of GDS on Thursday the central bank said that banks would not be required to obtain prior approval of RBI for introducing the scheme. Banks, however, asked to inform the details of the scheme including names of branches operating the scheme to the Reserve Bank of India Banks would be required to report the gold mobilised under the scheme by all branches in a consolidated manner on a monthly basis.