SEBI allows Gold ETFs to invest in Gold Deposit Schemes
Market regulator SEBI has allowed Gold Exchange Traded Funds (ETFs) to invest in gold deposit schemes of banks, as part of overall efforts to utilize idle assets of the precious metal for more productive purposes.
The gold ETFs of mutual funds have been permitted to invest in Gold Deposit Scheme (GDS) of banks, subject to certain conditions including that the total investment in GDS will not exceed 20% of total asset under management of such schemes.
As per RBI, about 20,000 tonnes of idle gold is lying with the people. The central bank wants to channelize the idle gold for productive purposes and also curb the demand for imports.
As per SEBI guidelines, before investing in GDS, mutual funds would have to bring out a written policy related to the investment with due approval from the Board of the Asset Management Company and the Trustees.
Increasing gold imports have been contributing substantially to the widening of Current Account Deficit (CAD). In 2011-12 fiscal, gold imports stood at USD 56.5 billion.