Explained: How will India's International Bullion Exchange (IIBX) work

India's International Bullion Exchange (IIBX) will be open for jewellers with a net worth of Rs 25 crore and above to participate

Prime Minister Narendra Modi will on Friday launch India's first bullion exchange, India International Bullion Exchange (IIBX), in GIFT city in Gujarat. The exchange, which was announced in Budget 2020, will sell physical gold and silver. According to a report by the Indian Express, infrastructural arrangements to store these precious metals have already been made.

"For the first time in India, since the liberalisation of gold imports through nominated banks and agencies in the 1990s, the eligible qualified jewellers in India, as notified by International Financial Services Centres Authority (IFSCA), have been allowed to directly import gold through IIBX. This reform permits direct participation of qualified jewellers on IIBX for the purpose of importing gold," an official was quoted as saying in the report.

The exchange will be open for jewellers with a net worth of Rs 25 crore and above to participate. NRIs and institutes will also be eligible to participate in the exchange after registering with the International Financial Services Centre Association (IFSCA).

How will IIBX work?

Registered jewellers and traders will be able to sell and buy physical gold and silver in the exchange. For this, they will have to become a trading partner or a client of an existing trading member.

A branch or a subsidiary needs to be opened with IFSC for the same. The jewellers who do not have a physical presence in India will also be able to transact the metals, but they will not be allowed to connect with a client under them.

The exchange is expected to bring transparency to the price-setting mechanism and provide standardisation to the financialisation of the bullion in India. It shall also work as a standard-setting tool for the quality of the bullion.

What will be traded at the exchange initially?

In the early stage, gold 1 kg with 995 purity and gold 100 grams with 999 purity will be traded with a settlement period of T+0. Further, the exchange is expected to extend the settlement period to T+2 days.

Who will head the IIBX?

Ashok Gautam will head IIBX as MD and CEO. He took charge in February 2022 and worked with IDBI Bank before this. He has earlier worked with the State Bank of India (SBI).

The exchange was to be inaugurated in October 2021 but was postponed due to the Vibrant Gujarat Summit in January 2022.