New good delivery norms for gold: BIS wants independent monitoring body

Also wants such an agency to come under its purview

With the bullion industry aiming to create Indian good delivery standards for gold that are in sync with globally acceptable LBMA standards, India's quality specification and regulating agency, the Bureau of Indian Standards, has expressed the view that an independent agency is required to monitor compliance to the standards. It also wants to bring such an agency under its purview, says sources close to the development.

The views were expressed by BIS in a meeting on the subject with industry stakeholders, including bullion refineries. The move was proposed by the bullion industry, and the Indian Bullion and Jewellers Association (IBJA) submitted draft good delivery norms to the finance ministry last week. The draft is also in the public domain for suggestions.

While this is an industry initiative, the norms will ultimately require government approval and hence the issue was also discussed with the BIS. At present, only London Bullion Market Association (LBMA) good delivery norms are acceptable even for deliveries on commodity exchanges in India and only bullion that meets LBMA norms is imported.

Good delivery norms have become important for Indian bullion refineries with dore refining facilities, considering that over the past few years dore import has increased. In the Indian environment, not all refineries are in a position to implement LBMA standards and hence Indian-refined gold is generally not considered good delivery.

An jewellery exporter said, "They have to compulsorily use imported LBMA-compliant gold for making jewellery for exports." Once Indian standards are implemented, the ease of doing business will improve, as even Indian-refined gold would be considered good delivery on commodity exchanges, be they spot exchanges or futures.

Norms for yellow metal:

• Bullion industry has proposed good delivery norms for gold refined in India
• So far, only LBMA  norms prevailed as good delivery
• The move will help grow India’s bullion business by transparency
• BIS agreed for an independent agency to monitor these norms 
• Refineries will have to get good delivery norms compliance audited by the recognised auditors

The issue of good delivery norms further assumes significance because, while refined gold import is not a big worry, imported dore becomes an area of concern if its source isn't verifiable, or if it is established that the dore comes from a conflict zone. A zone is categorised as 'conflict' if the money generated on the sale of the commodity is used for promoting illegal or anti-social, anti-civil activities.

Imported gold and dore will also have to comply with the responsible gold norms proposed by The Organisation for Economic Co-operation and Development (OECD).

James Jose, secretary, Association of Gold Refiners and Mints said, "For good delivery, LBMA is ready to provide technical support and an independent body can do monitoring of Indian-good delivery norms."