Indian Mutual Funds Suspend Bulk Gold ETF Subscriptions Ahead of Diwali

Key Facts

1Indian mutual fund houses, including Kotak Mahindra and HDFC, suspended bulk subscriptions to gold ETFs.

2The move followed discussions with the Securities and Exchange Board of India (SEBI) to limit import pressure on the rupee.

3India's gold imports fell to $1.8 billion in September from $2.3 billion in August.

Indian mutual fund houses, including Kotak Mahindra and HDFC, suspended bulk subscriptions to gold exchange-traded funds (ETFs). Reuters reported that the move followed discussions with the Securities and Exchange Board of India (SEBI) to limit import pressure on the rupee. The suspension comes just as India enters the peak buying season for gold ahead of the Diwali festival.

India's gold imports fell to $1.8 billion in September from $2.3 billion in August, according to Reuters. This regulatory intervention aims to protect the rupee from depreciation caused by high oil prices and a widening trade deficit. While physical gold buying remains unaffected, the restriction on the ETF channel removes a key source of investment flows during a period of traditionally high seasonal demand.