Vault managers, regulated under the SEBI (Vault Managers) Regulations, 2021, are key players in India’s gold exchange system. They are responsible for safely storing and managing physical gold backing electronic gold receipts (EGRs) traded on exchanges. Vault managers, as trusted custodians, play a crucial role in maintaining the integrity and efficiency of the gold trading system. These entities must register with SEBI and maintain strict standards for gold storage, quality assurance, and record-keeping. Their primary functions include securely storing gold, issuing and redeeming EGRs, maintaining accurate gold deposits and withdrawal records, and ensuring the gold’s quality and purity. The Banking Regulation Act, 1949, particularly Section 6(1)(d), which allows banks to provide safe deposit vault services, and RBI guidelines, issued under Section 35A of the RBI Act, provide specific directions on customer due diligence and locker operations. These regulations aim to prevent misuse of lockers for illegal activities and ensure proper `documentation of locker access.
Under the Indian Contract Act, 1872, Sections 151 and 152 define the duty of care required from vault managers as bailees. Section 43A of the Information Technology Act, 2000, is relevant for ensuring data protection in digital vault management systems. In cases of negligence or misconduct, vault managers may be held liable under Sections 406 (criminal breach of trust) or 409 (criminal breach of trust by a public servant, banker, merchant, or agent) of the Indian Penal Code, 1860.
AUTHOR:
Thirisha S, 4th-year student of B.A., LL.B. (Hons.) from School Of Excellence in Law.