SEBI has updated its vault manager regulations to include gold and silver ETFs and derivatives. The regulator also increased the minimum net worth requirement to ₹75 crore from ₹50 crore, aiming to improve security and standardize storage protocols for bullion-backed investments across the industry.
The Securities and Exchange Board of India (SEBI) has broadened its oversight of the bullion market by amending the 2021 Vault Managers Regulations. The regulator is moving away from a framework that was primarily focused on Electronic Gold Receipts (EGRs) to a more comprehensive system that now includes gold and silver exchange-traded funds (ETFs) and bullion derivatives.
Expansion to ETFs and Derivatives
This shift means that vault managers—the entities responsible for storing the physical metal that backs various financial products—will now follow a uniform set of rules, regardless of whether they are handling EGRs, ETFs, or derivative-backed bullion. The regulator aims to ensure that storage, security, and quality standards are consistent across all bullion-linked financial instruments in India. This move is designed to create a more integrated and reliable environment for investors who hold gold and silver through digital or financial products.
Higher Capital Requirements
To ensure financial stability and operational strength, SEBI has increased the minimum net worth requirement for vault managers from ₹50 crore to ₹75 crore. This capital buffer is intended to ensure that vaulting service providers have sufficient financial resources to manage the growing complexity and size of the bullion market.
For the industry, this change acts as a higher barrier to entry. While it aims to professionalize the sector, it could also lead to market consolidation. Smaller vault managers who may struggle to meet the new net worth requirement might either merge with larger players or exit the business, potentially leaving the market with fewer but more heavily capitalized providers.
Improved Security and Standardization
SEBI is also replacing the older "Gold Standards" terminology with "Bullion Delivery Standards." This change mandates consistent storage and delivery protocols across the entire ecosystem.
Security protocols are also being significantly tightened. Vault managers are now required to implement enhanced measures to protect against risks such as cyberattacks, theft, fraud, and physical damage like fire or burglary. Furthermore, the new mandates enforce stricter segregation of assets. Managers must maintain clear, separate accounts and storage logs for different business lines and specific bullion-related instruments.
Compliance officers will take on a more active role under this framework, with specific responsibilities to monitor and ensure these operational standards are consistently met. This institutionalization of the custody process is a step toward maturing the domestic bullion market. The regulator is expected to release a detailed circular outlining the specific operational instructions for these new requirements soon, which will be the next key update for industry participants to track.