Sebi Issues Vault Manager Guidelines To Create Electronic Gold Receipts

The Securities and Exchange Board of India (Sebi) has recently issued guidelines for the registration process of Vault Manager for gold. They notified that soon the regulations in the name of Securities and Exchange Board of India (Vault Managers) Regulations, 2021, will be implemented.

To apply for the certificate of registration, individuals need to fulfil the eligibility criteria as notified by Sebi. Some of the major eligibility criteria for the application process include having a minimum net worth of Rs. 50 crore and maintaining adequate infrastructure as specified by the board for the safe deposit, storage, and withdrawal of the gold. Sebi has clarified that only a corporate body based in India can apply for the registration.

Once registered as a Vault Manager, the applicants will have to pay a registration fee to the board. The applicant needs to have a proper computerised setup and security system to ensure the highest level of security for the gold. The recent notice by Sebi mentioned that the Vault Manager can only store gold in recognized vaults in the form and manner as specified by the stock exchange, and accordingly, they can create an electronic gold receipt.

“The Vault Manager shall have Data Recovery System in place to prevent loss or damage of electronic records and shall take necessary steps to maintain the quality and quantity of gold stored in the recognised vaults,” the notice states.

Individuals willing to create electronic gold receipts can place a request for the deposit of the gold with the registered Vault Managers.

The Board can terminate or suspend the certificate of the Vault Manager in case of any breach of conduct within a notice of 30 days. Similarly, the Vault Managers can surrender the certificate provided there is no pending obligation for physical delivery of gold or any other dispute related to the gold deposited in his/her vaults.

Sebi further clarifies in the notice, “If any loss is caused to the depositor or the beneficial owner by the Vault Manager in the course of providing vaulting services, the Vault Manager shall indemnify such depositor or beneficial owner in the manner as may be specified by the Board.”