IDBI Bank to offer loans against IDBI gold ETF

New Delhi, Oct 20: IDBI Mutual Fund is in talks with five major jewellery houses to enable investors to exchange their IDBI Gold ETF units for gold jewellery, a top official of the fund house has said.

If successful, investors in IDBI Gold ETFs will be able to directly buy physical gold jewellery from a jeweller without having to go to a stock exchange for selling their units.

“Some really big jewellery houses have in principle agreed to take our IDBI Gold ETF units and exchange it for gold jewellery. That will be an additional exit option for our investors in Gold ETF units. We will tie-up the modalities in next few days. We are talking to both large national and also regional players,” Mr Debasish Mallick, Managing Director and Chief Executive Officer, IDBI Asset Management said here on Thursday.

Mr Mallick said that IDBI Mutual Fund wants to enter into tie-ups with multiple jewellers for providing an additional exit option to investors.

Such tie-up would be a win-win arrangement for both the jeweller and the fund house, he said.

Mr Mallick was in the capital to announce the launch of IDBI Gold Exchange Trade Fund (ETF), an open-ended ETF. The New Fund Offer (NFO) has opened for subscription on October 19 and will close on November 2.

IDBI Mutual Fund has tied up with Stock Holding Corporation (250 branches), IDBI Capital Services (400 branches), Lakshmi Vilas Bank (271 branches), Corporation Bank (50 branches) and Federal Bank (50 branches) to sell IDBI Gold ETFs. This product will also be retailed through 800 branches of IDBI Bank across the country, Mr Mallick said.

Both IDBI Bank and Manappuram Finance have agreed to provide loans against IDBI Gold ETF units, he added. IDBI Mutual Fund has no immediate plans to launch Gold Fund of Funds.