Kotak Mutual Fund has temporarily halted lump sum and switch-in subscriptions in Kotak Silver ETF Fund of Fund, due to the difference in premiums charged in the domestic market compared to international prices.
Global silver markets have experienced a sustained demand-supply deficit over recent years, driving prices upward. The premium on domestic silver prices over international markets rose to 5.70 per cent on Friday from 0.51 per cent on September 4.
On Thursday, the silver premium has suddenly jumped to 5.70 per cent from 3.41 per cent logged on Wednesday.
If invested at a premium, investors must wait until the silver price rises to the level of the premium before realising any profit.
The domestic silver is currently trading at a significant premium compared to international prices due to acute scarcity in India’s physical silver market, said Kotak MF in a statement.
“We anticipate that the shortage in domestic silver supply may persist till October-end,” it added.
Kotak MF cites investor protection amid supply crunch
In the best interest of investors, Kotak MF said it has temporarily suspended lump-sum/switch-in investments in Kotak Silver ETF FoF and will resume subscriptions once the premium normalises to acceptable levels.
SIP and STP (Systematic Transfer Plan) investments will continue uninterrupted, it said.
The temporary restriction on lump-sum/switch-in investments should not be interpreted as a negative view on silver as a commodity, said the fund house.
The selling premium remains modest at about 3 per cent, and we continue to maintain a constructive outlook on silver from a long-term investment perspective. This measure is purely aimed at protecting investors from entering at inflated domestic premiums, it added.
Published on October 9, 2025