Indian Mutual Funds Suspend Gold Investment Inflows to Protect Rupee
Major Indian mutual fund houses have suspended fresh lump-sum and SIP investments in gold funds to curb imports and stabilize the depreciating Indian rupee.
More than a dozen Indian mutual fund houses, including HDFC Mutual Fund, SBI Mutual Fund, ICICI Prudential, and Kotak Mahindra, suspended fresh subscriptions to gold and silver fund of funds (FoFs) effective October 16, 2026. The restrictions target lump-sum investments, switch-in transactions, and new registrations for systematic investment plans (SIPs) and systematic transfer plans (STPs). Existing SIP installments and redemptions remain unaffected, and gold exchange-traded funds (ETFs) continue to trade on bourses.
The move comes just before the Dussehra and Diwali festive seasons, when gold demand typically peaks. While fund houses did not officially cite reasons in public notices, market participants and some fund officials attribute the suspension to verbal instructions or a nudge from the Securities and Exchange Board of India (SEBI), potentially initiated by the Reserve Bank of India. Conversely, sources from the Association of Mutual Funds in India claim the decisions were made independently by the asset management companies.
These curbs aim to prevent a surge in gold imports, which are purchased in US dollars and put pressure on the Indian rupee, which has depreciated approximately 7% this year. This action follows other government efforts to shield the currency, including raising import duties on gold and silver to 15% and public appeals from Prime Minister Narendra Modi for citizens to avoid gold purchases.
