Karnataka CID Investigates Digital Gold Savings Firm Jar for Alleged Regulatory Breaches

Digital Gold Savings Startup Jar Under Investigation by Karnataka CID

Overview

Jar, a Bengaluru-based digital gold savings startup, has been searched by the Deposit Fraud Investigation unit of Karnataka's Crime Investigation Department (CID) over potential violations.

Investigation Focus

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The CID is seeking clarity on Jar's gold storage practices, including custodial arrangements and safeguards to protect customer holdings. The company stores its physical gold in secure vaults operated by Brink's, a global security and logistics firm, and insures the deposits with ICICI Lombard, a leading insurance company in India.

Business Model

Jar operates a digital gold platform that allows users to invest in and buy digital gold via micro transactions. Users can redeem their savings as cash, take physical delivery of gold, or buy jewellery in exchange. The company competes with Paytm, PhonePe, Amazon Pay, Google Pay, and Tanishq, among others, in the digital gold savings category.

Investment and Growth

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Jar is currently negotiating a fresh funding round of $100 million (Rs 900 crore) with WestBridge and others, valuing the company at $550 million (Rs 4,900 crore), up from $300 million (Rs 2,700 crore) in 2022. The sale of digital gold has surged to a record high of Rs 3,926 crore across 219 million transactions in January 2025, up 4X from Rs 762 crore in January 2024.

Regulatory Environment

The Securities and Exchange Board of India (SEBI) has cautioned against investing in digital gold products offered through online platforms, stating they are not regulated under the securities market framework and may carry significant risks. Despite this, transaction volumes and amounts have continued to rise, with the National Payments Corporation of India (NPCI) reporting a 4X increase in sale of digital gold on a year-on-year basis.