GOLD EXCHANGE TRADED FUND SCHEME (GOLD ETFS) INVESTMENT IN GOLD DEPOSIT SCHEME (GDS) OF BANKS

Circular No.: CIR/IMD/DF/04/2013

Date: 15/02/2013

SEBI (Mutual Funds) Regulations, 1996, (MF Regulations) permits Gold Exchange Traded Fund scheme (Gold ETFs) to invest primarily in:

·         Gold

·  Gold related instruments –gold related instruments are such instruments having gold as underlying, as are specified by SEBI from time to time.

It has now been decided to designate Gold Deposit Scheme (GDS) of banks as one such gold related instrument. Investment in GDS of banks by Gold ETFs of mutual funds will be subject to following conditions:

• 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 Securities and Exchange Board of India 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.

Regards

CA. Mona Singhal

Partner

Arpit Gupta & Associates

Chartered Accountants

701, Nirmal Tower,

26, Barakhamba Road,

Connaught Place, Delhi-110001

Mobile:- +91-9873082769

Website:- www.caaga.co.in