You open your Demat account and see your Gold ETF units.
But here is a question most investors probably never ask:
Where is the actual gold?
Your Gold ETF may appear digitally in your Demat account, but the bullion underlying a Gold ETF does not sit inside that account. Gold ETF schemes invest primarily in gold or permitted gold-related instruments, while physical bullion is held through custody and vaulting arrangements.
That infrastructure is now getting greater regulatory attention.
At its Board meeting on 24 September 2026, the Securities and Exchange Board of India (SEBI) approved amendments to expand the regulatory framework for Vault Managers beyond Electronic Gold Receipts (EGRs) to bullion underlying specified bullion-related instruments, including ETFs and derivatives.
One headline change immediately stands out:
Minimum net worth required for a Vault Manager: ₹50 crore → ₹75 crore
But the ₹75 crore figure is only part of the story.
SEBI has also approved a stronger framework covering areas including storage, security, segregation, reconciliation, insurance, governance and risk management.
For investors, therefore, the more useful question isn’t simply:
“What has SEBI changed?”
It is:
“When I buy a Gold ETF, who actually safeguards the gold behind my investment?”
Is a Gold ETF Actually Backed by Physical Gold?
Broadly, Gold ETFs are mutual fund schemes designed to provide exposure to gold without requiring investors to personally buy, store and safeguard physical bullion.
Under India’s mutual fund framework, Gold ETF schemes invest primarily in gold or gold-related instruments.
However, investors should not assume that every Gold ETF maintains an identical portfolio composition at every point in time. The current Scheme Information Document (SID), portfolio disclosures and other scheme documents should always be checked for the particular ETF.
The important distinction is:
You own ETF units. The mutual fund scheme owns the underlying assets.
Buying 100 units of a Gold ETF does not mean that 100 individually identifiable pieces of gold have your name written on them inside a vault.
Instead, your ETF units represent your interest in the scheme, whose assets are managed and held according to its mandate and the applicable regulatory framework.
Where Is the Physical Gold Behind a Gold ETF Stored?
This is where the structure becomes interesting.
Several entities can perform different roles behind the simple ETF unit that you see in your Demat account.
1. Asset Management Company
The Asset Management Company, or AMC, manages the mutual fund scheme according to its stated investment objective and applicable regulations.
2. Custodian
Mutual fund assets are held through prescribed custody arrangements.
The custodian plays an important role in safeguarding scheme assets and complying with the applicable regulatory framework.
3. Vaulting Infrastructure
Where physical bullion is involved, that bullion ultimately requires secure physical storage.
Therefore, behind the apparently simple Gold ETF unit visible on your mobile phone sits an infrastructure that can broadly be understood as:
Bullion → Custody → Vaulting → Records & Reconciliation → Mutual Fund Scheme → ETF Units → Investor’s Demat Account
SEBI’s September 2026 decision is significant because it brings a wider universe of bullion vaulting within the Vault Managers regulatory framework.
What Exactly Has SEBI Changed for Gold and Silver ETF Vaults?
At its September 24, 2026 Board meeting, SEBI approved amendments to the SEBI (Vault Managers) Regulations, 2021.
The existing framework, which was associated with vaulting services supporting Electronic Gold Receipts, is being expanded to cover bullion underlying specified bullion-related instruments, including ETFs and derivatives.
Here’s the change in simple terms:
| Area | Earlier Position | SEBI’s Approved Direction |
|---|---|---|
| Scope of Vault Manager framework | Focused on EGR ecosystem | Expanded to specified bullion-related instruments including ETFs and derivatives |
| Minimum net worth | ₹50 crore | ₹75 crore |
| Storage | Existing regulatory framework | Strengthened requirements |
| Security | Existing safeguards | Strengthened requirements |
| Segregation | Existing controls | Enhanced framework |
| Reconciliation | Existing processes | Strengthened requirements |
| Insurance | Existing framework | Strengthened requirements |
| Governance | Regulatory oversight | Enhanced governance |
| Risk management | Existing controls | Strengthened framework |
The underlying logic is straightforward.
As India’s bullion-linked financial market expands, the physical infrastructure supporting those financial products also requires an appropriate regulatory framework.
One important distinction
SEBI’s Board approved these amendments on September 24, 2026.
Investors should not interpret the Board approval date as automatically meaning that every operational provision became effective on that same date.
The final amended regulations, implementation directions and applicable timelines should be referred to as they are formally notified.
Why Has SEBI Raised the Vault Manager Net-Worth Requirement to ₹75 Crore?
A vault handling bullion is not an ordinary warehouse.
It can form part of the infrastructure supporting assets behind financial products ultimately held by thousands of investors.
That brings responsibilities involving:
- physical security;
- bullion storage;
- segregation;
- insurance;
- record keeping;
- reconciliation;
- governance;
- risk management; and
- regulatory compliance.
Increasing the minimum net-worth requirement from ₹50 crore to ₹75 crore raises the financial-strength threshold for entities operating within the Vault Manager framework.
However, investors should avoid drawing an exaggerated conclusion.
A higher Vault Manager net-worth requirement does not make a Gold ETF risk-free.
The change strengthens an important part of the operational infrastructure.
It does not guarantee the value or investment performance of Gold ETFs.
Does This Make Gold ETFs Safer?
There are two different kinds of risk to understand.
The latest regulatory changes are intended to strengthen the vaulting and custody ecosystem supporting bullion-related financial products.
That is different from eliminating investment risk.
Gold ETF investors can still face several risks.
Gold Price Risk
If gold prices decline, the value of a Gold ETF can also decline.
Tracking Error
The ETF’s return may not perfectly match movements in its underlying benchmark because of expenses, portfolio positioning, cash holdings and operational factors.
Liquidity Risk
Some ETFs trade more actively than others.
Lower liquidity can contribute to wider bid-ask spreads and potentially affect execution prices.
Market Price vs Underlying Value
Because ETFs trade on exchanges, their traded market price can temporarily differ from the underlying portfolio value or NAV-related reference.
International Gold Prices and Currency Movements
Indian gold prices can be influenced by international bullion prices, movements in the rupee and other domestic and global factors.
Therefore:
Stronger vault rules strengthen an operational layer. They do not eliminate investment risk.
Your Gold ETF Is Digital. The Gold Behind It Isn’t.
This may be the most interesting takeaway from the entire development.
Investing has become increasingly digital.
You can:
Open an account online → Transfer money electronically → Place an ETF order on your phone → See the units in your Demat account
Yet an asset underlying a Gold ETF can ultimately involve physical bullion stored in a highly controlled physical environment.
That creates two different worlds.
What the investor sees
Demat Account → ETF Units → Market Price
What sits behind the product
Mutual Fund → Underlying Assets/Bullion → Custody → Vaulting → Security → Insurance → Records → Reconciliation
The September 2026 SEBI decision focuses on strengthening an important part of that second world.
What About Silver ETFs?
The regulatory development isn’t limited to gold.
SEBI’s expanded framework concerns bullion underlying specified bullion-related instruments, including relevant ETF and derivative structures.
That matters because Indian investors now have exchange-traded exposure to both gold and silver.
Regardless of whether an investor sees only electronic units on a screen, physical bullion still requires appropriate custody, storage, security and operational controls wherever it forms part of the underlying assets.
Gold and Silver ETF Trading Rules Have Also Changed Recently
Vaulting isn’t the only area where India’s ETF framework has evolved.
From 7 September 2026, revised ETF trading rules also became effective covering areas such as ETF base prices, price bands and a pre-open call-auction framework for Gold and Silver ETFs.
Gold and Silver ETFs have a specific dynamic price-band structure under that framework.
But this is important:
The September 7 and September 24 developments deal with two different parts of the ETF ecosystem.
The September 7 framework primarily concerns:
How Gold and Silver ETFs trade and discover prices on the stock exchange.
The September 24 Board decision concerns:
The regulatory framework around vaulting bullion underlying specified financial products.
For a detailed explanation of the trading-side changes, read our earlier analysis:
👉 New Stock Market Rules From September 7, 2026: NSE F&O Pre-Open Session & SEBI ETF Changes Explained
Together, the two articles help investors understand both sides of the ecosystem:
How your Gold ETF trades — and what happens behind the physical bullion supporting the product.
Gold ETF vs Physical Gold vs Digital Gold: Are They the Same?
No.
The word gold may appear in all three, but their structures can be very different.
| Feature | Gold ETF | Physical Gold | Digital Gold |
|---|---|---|---|
| What investor holds | ETF units | Physical bullion/jewellery | Digital/contractual entitlement depending on provider structure |
| Exchange traded | Yes | No | Generally no |
| Demat generally required | Yes for exchange holding/trading | No | No |
| Personal storage required | No | Yes | Usually not unless physical delivery is taken |
| Market price visibility | Exchange traded | Dealer/jeweller price | Platform/provider price |
| Regulatory structure | Mutual fund/securities-market framework | Depends on product/transaction | Product structure and regulatory treatment can differ |
| Jewellery making charges | No | Can apply | Not applicable in the same way |
| Important considerations | Tracking error, liquidity, expense ratio, spread | Purity, storage, insurance, making charges | Provider, counterparty, product structure and terms |
Investors should therefore avoid treating Gold ETFs, jewellery, gold coins/bars and digital gold as interchangeable products merely because all provide exposure to gold in some form.
Their legal structure, liquidity, costs, custody and risks can differ substantially.
Do Existing Gold ETF Investors Need to Do Anything?
SEBI’s Board approval itself does not mean an existing investor needs to immediately buy, sell or switch a Gold ETF.
A regulatory infrastructure change should not automatically be interpreted as an investment signal.
Instead, it is an opportunity to understand the product better.
Before investing in a Gold ETF, investors may want to examine:
- Scheme investment objective
- Expense ratio
- Tracking error/tracking difference
- Trading liquidity
- Bid-ask spread
- NAV/iNAV information where applicable
- Underlying portfolio
- Scheme Information Document
- Investment horizon and objectives
- Personal risk profile
The ETF with the lowest-looking unit price isn’t automatically the cheapest or most suitable investment.
Understanding the structure matters.
Why Should Retail Investors Care About Vaults?
Modern financial markets can hide enormous infrastructure behind incredibly simple interfaces.
An investor taps:
BUY
But behind that single action may sit:
Broker → Stock Exchange → Clearing Corporation → Depository → Mutual Fund → AMC → Custodian → Banking Infrastructure → Market Makers → Vaulting Infrastructure
The exact chain depends on the product and transaction, but the broader point is important.
Understanding financial infrastructure helps investors ask better questions.
Not simply:
“Will gold prices rise?”
But:
“What exactly am I buying?”
“What does my ETF unit represent?”
“Who holds the underlying assets?”
“How liquid is the ETF?”
“How closely does it track its benchmark?”
“What safeguards exist behind the product?”
Those are useful questions for informed investing.
Riddhi Siddhi Share Brokers View
At Riddhi Siddhi Share Brokers, we believe investor education should go beyond discussing whether markets—or gold prices—may rise or fall.
Understanding how an investment actually works is equally important.
A Gold ETF may look like a simple ticker in your Demat account.
Behind that ticker, however, is an ecosystem connecting electronic financial markets with physical bullion.
SEBI’s decision to expand the Vault Managers framework and increase the minimum net-worth requirement from ₹50 crore to ₹75 crore therefore highlights something investors rarely see:
Digital investing still depends on strong financial and physical infrastructure behind the screen.
Want to Explore Mutual Funds or Assisted Trading?
If you want to understand the investment process for Mutual Funds and exchange-traded investment products, explore:
👉 Mutual Funds & Other Services at Riddhi Siddhi Share Brokers
For investors and traders who prefer greater support with trade execution and monitoring:
👉 Explore Assisted Trading Services at Riddhi Siddhi Share Brokers
📲 Message +91 99875 53455 to request access to our exclusive WhatsApp community for daily prices, opportunities and market updates.
You can also connect with Riddhi Siddhi Share Brokers to understand our Assisted Trading Services.
👉 Visit Riddhi Siddhi Share Brokers
Riddhi Siddhi Share Brokers — We Suggest… You Invest.
Frequently Asked Questions
1. Where is the physical gold behind a Gold ETF stored?
Where a Gold ETF holds physical bullion, it is held through prescribed custody and physical safekeeping arrangements rather than inside an investor’s Demat account. The investor holds ETF units electronically, while the scheme holds its underlying assets according to its investment mandate and applicable regulations.
2. What did SEBI change for Vault Managers in September 2026?
At its September 24, 2026 Board meeting, SEBI approved expanding the Vault Managers framework beyond the EGR ecosystem to bullion underlying specified bullion-related instruments, including ETFs and derivatives. SEBI also approved increasing the minimum net-worth requirement for Vault Managers from ₹50 crore to ₹75 crore and strengthening several operational safeguards.
3. Has the Vault Manager minimum net worth increased from ₹50 crore to ₹75 crore?
SEBI’s Board has approved an increase in the minimum net-worth requirement from ₹50 crore to ₹75 crore as part of the amendments to the Vault Managers framework.
4. Are Gold ETFs backed by physical gold?
Gold ETF schemes invest primarily in gold or permitted gold-related instruments according to their scheme mandate and applicable regulations. Investors should check the current Scheme Information Document and portfolio disclosure of the specific Gold ETF rather than assuming that every scheme has an identical asset composition.
5. Do the new SEBI rules make Gold ETFs risk-free?
No.
Stronger vaulting requirements address custody, security and operational infrastructure. Gold ETFs remain subject to investment risks including changes in gold prices, liquidity, tracking error and other market factors.
6. Do the changes also matter for Silver ETFs?
Yes. SEBI’s expanded framework concerns bullion underlying specified bullion-related instruments, which includes the relevant infrastructure supporting bullion ETFs and derivatives.
7. Is a Gold ETF the same as digital gold?
No.
A Gold ETF is an exchange-traded mutual fund product operating within India’s securities-market framework. Digital-gold products can have a different legal, operational and regulatory structure. Investors should understand the specific product before investing.
8. Should I sell my existing Gold ETF because of these new rules?
The regulatory change itself should not be treated as a buy or sell signal. Investment decisions should depend on factors such as your objectives, portfolio allocation, risk profile, costs, liquidity and the characteristics of the particular scheme.
Final Takeaway
A Gold ETF makes investing in gold appear almost completely digital.
But the physical bullion behind the ecosystem is very real.
Behind ETF units sitting in a Demat account is infrastructure responsible for custody, storage, security, records, reconciliation and other operational functions.
SEBI’s September 24, 2026 decision brings that largely invisible infrastructure into sharper focus.
The headline is:
₹50 crore → ₹75 crore minimum net worth for Vault Managers
But the bigger story is:
SEBI is strengthening the regulatory architecture governing the vaulting infrastructure behind bullion-linked financial products.
For investors, that makes one simple question worth remembering the next time a Gold ETF appears on the trading screen:
“I can see my Gold ETF—but do I understand what sits behind it?”
Understanding the answer is part of becoming a more informed investor.
Disclaimer
This article is for educational and informational purposes only and should not be construed as investment advice, investment research or a recommendation to buy, sell or hold any security, ETF, mutual fund or other financial product.
Riddhi Siddhi Share Brokers is an NSE & BSE registered Authorised Person of a leading broker and does not provide investment advisory services.
Investments in securities, mutual funds and ETFs are subject to market risks. Gold and Silver ETFs may be affected by movements in underlying commodity prices, liquidity, tracking error, currency movements and other market factors.
Regulatory provisions may change, and investors should refer to the latest SEBI regulations, circulars and applicable scheme documents.
Past performance is not indicative of future results. Investors should conduct their own due diligence and consult a SEBI-registered investment adviser where appropriate before making investment decisions.