SEBI Proposes ₹75 Crore Net-Worth Floor and Wider Bullion Scope for Vault Managers
The Securities and Exchange Board of India (SEBI) has proposed to bring all physical bullion underlying SEBI-regulated products under the SEBI (Vault Managers) Regulations, 2021, and to raise the minimum net worth of a registered vault manager from Rs 50 crore to Rs 75 crore. The proposals are in the Consultation Paper on Review and Expansion of the Scope of the SEBI (Vault Managers) Regulations, 2021, issued on 11 August 2026. Comments were due by 1 September 2026.
Why SEBI wants a wider framework
The 2021 regulations, and SEBI's master circular of 24 June 2024, deal only with vault managers holding gold that underlies Electronic Gold Receipts (EGRs) traded on stock exchanges. The consultation paper notes that gold ETFs, silver ETFs and physically settled exchange-traded derivatives on gold and silver have grown steadily, but the vaulting for these products sits outside the vault manager framework and relies on contractual arrangements under exchange bye-laws and clearing corporation mechanisms. SEBI proposes a single regulatory framework for the physical metal behind all of these products.
Proposed amendments to the regulations
| Provision | Proposed change |
|---|---|
| Regulation 2(1), definitions | New definitions of "bullion" (precious metals including gold and silver), "bullion related instruments" (EGRs, ETFs, derivatives and other instruments permitted by SEBI) and "exchange traded funds" |
| Regulation 2(1)(i) | "Gold standard" renamed "Bullion Delivery Standards" |
| Regulation 4(b) | Minimum net worth raised from Rs 50 crore to Rs 75 crore |
| Regulation 4(f)(v) | Security policy to cover cyber-attack and terrorism, in addition to theft, burglary, fire and fraud |
| Regulation 12(12) | Reconciliation to extend to clearing corporations and asset management companies or custodians, besides depositories |
| Regulation 13 | Bullion holdings to be segregated instrument-wise and entity-wise |
| Regulations 17 to 19 | EGR-specific procedures replaced by a general power for SEBI to prescribe the manner and procedure for vaulting services |
| New Chapter VIII | Each vault manager to appoint a compliance officer who reports non-compliance to SEBI quarterly and material violations immediately |
The amended regulations would take effect on the thirtieth day after publication in the Official Gazette.
Draft operating circular
SEBI has also released a draft circular that would consolidate the existing EGR guidelines with new operating rules for bullion underlying derivatives, ETFs and other instruments. It is arranged in five chapters: the EGR framework, vaulting for derivatives contracts, standard operating guidelines for all instruments, infrastructure requirements, and change of control. Key operating points include:
- for EGRs, gold must meet the LBMA Good Delivery Standard or norms prescribed by SEBI or the stock exchanges;
- depositories are to build a common interface for vault managers, exchanges, clearing corporations and clients, with access limited on a need-to-know basis;
- vault managers accept deposits between 10 am and 3 pm; EGRs are created the same working day and can be traded the next day, while gold deposited after 3 pm becomes tradeable on the second working day;
- vault managers and depositories reconcile EGRs against physical bullion daily, and depositories inspect physical holdings fortnightly.
The circular would come into effect within one month of issue. SEBI sought comments on whether the amendments are adequate for extending the regulations to ETFs, derivatives and other instruments, and on Chapters 2, 3 and 4 of the draft circular.
Who is affected
Existing and prospective vault managers would need to meet the Rs 75 crore net worth floor and the wider security, segregation and compliance officer requirements. Asset management companies running gold and silver ETFs, their custodians, clearing corporations handling physically settled bullion derivatives, depositories and stock exchanges would all interact with the expanded framework. For auditors of these entities, the proposed daily reconciliation, instrument-wise segregation and quarterly compliance reporting would be natural points for testing controls once the rules are final. Until SEBI notifies the amendments, the existing EGR-only framework continues to apply.
Updated on 27 September 2026: Added the official SEBI consultation paper of 11 August 2026 with the regulation-wise amendments, the draft operating circular, the 1 September 2026 comment deadline and the proposed effective dates.
