Gold Exchange Traded Fund Scheme (Gold ETFs) Investment in Gold Deposit Scheme (GDS) of Banks
Summary
SEBI designates the Gold Deposit Scheme (GDS) of banks as a gold-related instrument permissible for investment by Gold Exchange Traded Funds. Mutual funds are restricted to investing no more than 20% of their total assets under management into GDS. The circular mandates specific governance procedures, including written policies and dematerialized holding of gold certificates.
Text
SEBI (Mutual Funds) Regulations, 1996, permits Gold Exchange Traded Fund scheme to invest primarily in Gold and gold related instruments specified by SEBI from time to time.
It has now been decided to designate Gold Deposit Scheme of banks as one such gold related instrument.
The total Investment in GDS will not exceed 20% of total asset under management of such schemes.
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 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.
The policy shall 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.
This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act 1992, read with the provision of Regulation 77 of SEBI (Mutual Funds) Regulation, 1996.
Source: SecMarx — Gold Exchange Traded Fund Scheme (Gold ETFs) Investment in Gold Deposit Scheme (GDS) of Banks. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.