Gold ETFs can invest 20% assets in monetisation scheme: Sebi

Markets regulator Sebi today allowed gold exchange-traded funds (ETFs) to invest up to 20 per cent of their assets in the government's ambitious Gold Monetisation Scheme.
The government, in November, launched gold monetisation scheme to rein in demand for physical gold and contain its import.
Through the Gold Monetisation Scheme (GMS), gold in any form can be deposited with banks for a period of 1-15 years that will earn interest while redemption will be at the prevailing value at the end of the tenure.
The new scheme will replace the Gold Deposit Scheme (GDS) 1999 (GDS). However, the deposits outstanding under the GDS will be allowed to run till maturity unless these are withdrawn by the depositors prematurely.

The Securities and Exchange Board of India (Sebi) said existing investments by Gold ETFs of Mutual Funds under the GDS will be allowed to run till maturity unless these are withdrawn prematurely.
Gold ETFs are open-ended funds that trade on a stock exchange like any other share of a company and track closely the price of physical gold.

Each unit of the ETF is equivalent to one gram of gold and it gives an opportunity to investors to accumulate gold over a period of time.
In a circular, Sebi said cumulative investment by Gold ETF in Gold Monetisation Scheme will not exceed 20 per cent of total AUM of such scheme.

Besides, Sebi said that all other conditions applicable to investments in GDS of banks will also be applicable to investments by Gold ETFs in GMS.