Banking: Tata and Axis Bank bowed before the power of silver and took this big decision...

Tata Mutual Fund and Axis Mutual Fund have temporarily suspended their Silver ETF funds of funds. Citing a shortage of physical silver in the domestic market and a significant premium in local prices compared to global benchmarks, the suspension is effective October 14, 2025, and applies to outright purchases, switch-ins, and new registrations for Systematic Investment Plans (SIPs) and Systematic Transfer Plans (STPs). According to the fund house, this step is to protect investors from potential mispricing in the scheme's net asset value (NAV) due to unusual market conditions. Tata Mutual Fund stated that due to current market conditions and the shortage of physical silver in the domestic market, silver is trading at a premium compared to international prices. This premium directly impacts the scheme's valuation. Before Tata and Axis, SBI, UTI, and Kotak Mahindra Bank have taken similar steps.

These are not banned.
New subscriptions are suspended, but existing investors will remain unaffected. Tata MF has clarified that: Existing SIPs and STPs already registered will continue as scheduled. Redemptions, switch-outs, and Systematic Withdrawal Plans (SWPs) will be processed as usual. Transactions submitted before 3:00 pm on October 13, 2025, will be accepted and processed at the applicable NAV. The suspension is temporary and will remain in effect until further notice. This move comes at a time when the Indian silver market is facing a supply shortage. Domestic prices have risen sharply during the festive season, and silver is trading 5-12 percent higher than international prices.

Why is the premium in the local market high?
Silver coins, bars, and jewelry are seeing significant demand during the festive season. Industrial demand for silver in sectors such as solar energy, electric vehicles, and electronics is also driving the price increase. Imports have declined significantly, leading to a shortage of physical silver in the market. Since the Tata Silver ETF Fund of Funds invests in the Tata Silver Exchange Traded Fund (ETF) – which directly tracks domestic silver prices – this divergence between local and international markets makes it difficult for new investors to properly evaluate the scheme. By halting new investments, Tata MF aims to protect investors from overpaying during this period of elevated silver prices.

These also suspended ETFs
In addition to Tata Mutual Fund and Axis Mutual Fund, several mutual funds in India, including Axis, Kotak, UTI, and SBI, have temporarily suspended new investments in their silver ETF fund-of-funds (FOFs). This move comes amid a sharp rise in silver prices and a widening gap between domestic and international silver valuations. Physical silver supply in the domestic market is severely limited. Due to rising industrial demand, festive shopping, and import restrictions, obtaining silver at a reasonable price has become challenging. This shortage makes it difficult for mutual fund and ETF structures to maintain a correlation between the fund's NAV and the metal.

How will investors be affected?
Existing investors: Your SIPs, STPs, and holdings will continue to function as normal. You can redeem, switch out, or withdraw through SWP as per the scheme rules.

New investors: You cannot initiate new lump-sum investments or switch in until the suspension is lifted.

Pending orders: Transactions placed on or before 3:00 PM on October 13, 2025, will be processed under existing rules.

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