Demand for Silver, Platinum ETFs in India

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"The launch of ETFs in the white metal is stuck in regulatory frameworks."

Demand for exchange traded funds (ETFs) in precious metals other than gold is growing in India, as bullion experts say that the country requires more funds in commodities like silver and platinum.

Although gold ETFs got introduced in India only four years back, some eight gold ETFs have been performing well and giving excellent returns in the last four years. But the regulatory rules have so far prohibited various companies from launching ETFs in precious metals like silver and platinum.

"As of today, government rules do not allow us to launch such investment schemes on silver and platinum. But when there is an opportunity, we will definitely try to explore," Reliance Capital Asset Management Ltd CEO Sundeep Sikka told reporters. Reliance on Wednesday launched a Gold Savings Fund.

ETFs in commodities are yet to make a deep investment sense in India, even though eight mutual funds have launched Gold ETFs in the last two years.

Spurred by the success of Gold ETFs in the last two years, several companies in India have chalked out plans to launch Silver ETFs. However, the launch of the exchange traded funds in the white metal has been stuck in regulatory frameworks.

"While Gold ETFs are regulated by equities market regulator, Securities and Exchange Board of India (SEBI), the Silver ETFs are regulated by Forward Markets Commission (FMC), the commodities market regulator in India. We are waiting for approval from the regulators but nothing so far has been received. The matter is currently with the Indian Central government," Kothari said.

Mumbai-based Benchmark Mutual Fund which was the first company to start a Gold ETF in 2007 and has the largest collection of more than five tons may be the first to launch Silver ETFs also in India.

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