Gold ETFs shut door on large investments after discussions with Sebi amid rupee concerns - Moneycontrol.com
The move is symbolic and will not make any significant difference to flows into gold funds, industry experts said Single investments exceeding Rs 25 crore
The move is symbolic and will not make any significant difference to flows into gold funds, industry experts said Single investments exceeding Rs 25 crore are extremely rare in gold ETFs, meaning the restrictions are unlikely to have any meaningful impact on actual inflows into the category. Mutual funds restrict large lump-sum investments in gold ETFs Move aims to support efforts to ease pressure on the rupee Impact on actual gold demand expected to be negligible Did our AI summary help? India's leading mutual fund players have moved to curb large lump-sum investments into gold exchange-traded funds following discussions with market regulator Sebi on measures that could help ease pressure on the rupee and reduce demand for imported gold, people familiar with the matter told Moneycontrol. While the restrictions are real, industry executives said their impact on actual gold demand is likely to be negligible because single investments of the size being restricted are very rare. The move is, therefore, largely a gesture of support for Prime Minister’s call to reduce pressure on India's external account. The issue was discussed at a meeting of top mutual fund chief executives with Sebi officials last week, where the regulator and industry executives explored whether any steps could be taken with respect to gold ETFs and overseas fund-of-funds without disrupting retail investors or market functioning.
According to people familiar with the discussions, there was broad agreement that suspending subscriptions altogether would be undesirable as it could create unintended consequences, including speculative activity in exchange-traded units and disruptions to ongoing SIP investments. Instead, large fund houses agreed to discourage high-ticket lump-sum investments. "The industry discussions were around what could be done without impacting ordinary investors. Large players agreed that restricting very large lump-sum flows would be the most practical approach," said a person familiar with the matter. “There was no directive from Sebi. It was decision some of the leading players,” said one source. “The industry is mature and the move is in national interest and we need to act as responsible citizens of the country,” said a CEO of a leading mutual fund. The first move came from HDFC Mutual Fund, which announced restrictions on fresh subscriptions exceeding Rs 25 crore in its gold ETF (HDFC Gold ETF and HDFC Gold ETF Fund of Fund) offerings on Thursday. On Friday, the move was followed by ICICI Prudential Mutual Fund and Nippon India Mutual Fund, the country's largest gold ETF manager. Industry sources said other fund houses, including Aditya Birla Sun Life Mutual Fund, Kotak AMC and several peers, are expected to announce similar measures in the coming days.
Two executives at smaller fund houses said they were aware of the discussions but were not involved in conversations among larger asset managers. People familiar with the matter described the measures as largely symbolic. Single investments exceeding Rs 25 crore are extremely rare in gold ETFs, meaning the restrictions are unlikely to have any meaningful impact on actual inflows into the category. "The industry wanted to demonstrate support for the broader effort to reduce pressure on the currency without affecting retail participation," said a person familiar with the conversations. Another senior industry leader involved in the discussion said, “We will take a call on what needs to be done, if more needs to done.” The move comes amid growing concerns over India's external account as higher crude oil prices and strong gold imports add to dollar demand. On May 10, Prime Minister Narendra Modi urged citizens to defer gold purchases for a year to help conserve foreign exchange. "If possible, postpone the purchase of gold for one year," Modi said, while also asking citizens to defer overseas vacations as part of a broader effort to reduce pressure on the country's external account. Gold ETFs have emerged as one of the fastest-growing segments of the mutual fund industry over the past year as investors sought protection against geopolitical uncertainty, currency volatility and rising gold prices.
Gold and Silver ETFs as a category peaked in 2026 with AUM topping Rs 3 lakh crore. Thereafter, the 25% correction in the price of precious metals has significantly reduced demand. Monthly flows now stand at Rs 3,040 crore (as of April 2026) compared to the peak of Rs 24,039 crore. The category currently manages approximately Rs 1.71 lakh crore in assets and receives average monthly inflows of around Rs 6,500 crore (June 2025 to April 2026), according to industry data. Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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