With gold ETFs (exchange-traded funds) gaining popularity among investors, the Securities and Exchange Board of India (SEBI) is making the norms for verification of underlying assets (physical gold) tighter.
In a circular issued today, SEBI said that "physical verification of gold underlying the gold ETF units should be carried out by statutory auditors of mutual fund schemes and reported to trustees on half yearly basis."
It further said that the confirmation on physical verification of gold should also form part of half yearly report by trustees to SEBI.
"As size of asset under management in gold ETFs is increasing, SEBI wants to be extra cautious with the quality of underlying asset (that is gold) and hence creating these checks and balances," Rajan Mehta, executive director, Benchmark Mutual Fund, told Value Research. Benchmark Mutual fund accounts for 40 per cent of the total Rs 3,000 crore assets under management of gold ETFs.
The new norm on half yearly reporting of statutory audits will come into effect from April 2011.
