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Soon you'll be able to buy and sell physical gold online, just like shares

Gold policy is working to convert the precious metal into a financial asset; unified national rate of gold on the cards

Rajesh Bhayani  |  Mumbai 


Government is preparing a comprehensive policy announced by the finance minister in the Union Budget this year, which will focus on making an asset class. This will be major shift from the past, because so far, has been treated under the category of Once it is recognised as a financial asset, the securitised form of could also be defined. So far, the precious metal has been considered as a security only from the prism of exchange traded funds. However once it starts trading on a modern automated exchange platform, regulated by one of the existing regulators, it will get be able to avail financing on better terms and the risk margins jewellers maintain for availing bank finance will also be lower. Subhash C Garg, Secretary, the (DEA), indicated to Business Standard in an interview that will be developed as an asset class by ensuring the generation of a singular national rate in a transparent manner. The metal would also be regulated and be actively trade on spot exchanges. Besides, the monetisation scheme would be revamped as well. Sources say that the has submitted two models for transparent trading of on an automated exchange. One is to set up a dedicated exchange at Gift City-based International Finance Service Centre (IFSC), where the government plans to have a unified regulator. Indian businessmen can bring from vaults in the to the domestic market by paying customs duty at the exchange on which the commodity has been traded. Under BSE’s second model, all stakeholders will work together to revolutionise trading on the spot exchange platform by putting in place an entire eco-system, including vaults, repositories and such like. The model will permit jewellers to trade on a transparent electronic platform with infrastructure to ensure they can take delivery from vaults registered with BSE in almost all small cities. The government, however, has not decided which model to accept and whether this will be in phases. A BSE spokesperson declined to comment.

The BSE had earlier signed an MoU with Indian Bullion and Jewellers Association (IBJA) to form a spot exchange. Sources in the know say that a committee formed by on policy had, in the past, proposed the formation of a board that would name either the Securities and Exchange Board of India (Sebi) or the Reserve Bank of India (RBI) as the regulator of the spot exchange. So far, has been reluctant to take on this role. Interestingly, if is recognised as an asset, will have acquire new significance for those who buy it. Surendra Mehta, National Secretary, says, “says a policy will be adopted to develop as an asset class. However when that happens, the metal would likely be treated on par with other assets such as real estate and equities as far as capital appreciation is concerned. It will also have its own regulatory requirements in terms of registration, KYC and PAN, as in the case of equities and real estate. The spot exchange will be first initiative in this direction.” Making an asset class means that the government is moving from treating under the category of to that of financial assets, which is extremely positive for industry. Sudheesh Nambiath, lead analyst, South Asia and UAE, says, "Comparing how such reforms have brought changes globally, I expect India to leap forward in transparency and traceability with this move. It is possible that 5 years down th line, the dynamics are going to change significantly for the good of the country and industry." A source says, “The Government is now beginning to view from a wider perspective, and is apparently moving from bandaid approach that was used in the market to a goal-oriented one in terms of developing the market. Such a move will be good both for country and industry. What this means is that there is going to be greater transparency not just with respect to pricing but also the conduct of business.”

First Published: Mon, February 05 2018. 21:06 IST