Page 40 - Bullion World Volume 03 Issue 07 July 2022

Bullion World | Volume 2 | Issue 07 | July 2022

c) Bank Financing B2B contract with other miners for Refineries in India will serve as
imports. Furthermore, administrative collection, testing, and assaying
Indian banks do not lend advance
payments for dore imports, so complexity is associated with centres. They will also be in charge
aggregators facilitate import responsible dore sourcing, making of providing gold to banks for use in
finance. In most cases, small/ it impossible for a single refiner to leasing under the GML. The R-GMS
medium refiners do not have much tackle this issue. allows all Scheduled Commercial
bargaining power regarding contract e) Export Regulations Banks (SCBs) to act as custodians,
terms. Because banks do not lend but only BIS-approved refiners
Because India prohibits the export can refine this gold, benefiting the
for dore imports, refiners' money is
of pure bars, significant mines are entire sector. Notably, the scheme's
frequently locked up for months due
hesitant to sign long-term contracts deposits can now be dematerialised
to imports and related formalities.
with Indian refineries for the outright (converted to a digital certificate),
Indian or international banks should
selling of doré. Export of refined gold making them tradeable and
ideally finance such transactions.
bar, which is not allowed now by law, mortgageable.
However, all refineries in India are
could expand the market for Indian
now self-sufficient. Furthermore, Furthermore, allowing banks to
refiners and reduce the volatility of
gold importers are considered purchase locally made IGD bars
demand as they would stop relying
nominated agencies, whereas gold and accept GML payments in Indian
only on domestic demand.
doré importers are not. As a result, refined gold will eliminate the need to
gold doré cannot be imported on a This is because, during times of lease gold from outside. If R-GMS is
consignment basis. disparity in prices, suddenly, Indian implemented with appropriate bank
mines may not be able to buy dore incentives, input supply disruptions
d) Sourcing of Dore
since they will have to sell at a may be reduced.
Dore gold can only be obtained discount.
from a few countries because seven
of the world's largest twelve gold The way forward
mining countries prohibit the export A prominent role for IGD Refiner - There is no doubting that
of doré bars. The remaining five A Need for an hour policymakers and other stakeholders
countries, as well as several other Before 2020, only LBMA-accredited recognise the significance of a rising
countries with minor production, 99.5% purity gold bars were domestic gold refining business.
have contractual obligations with accepted for delivery by domestic The Association of Gold Refineries
foreign banks from whom they have commodity exchanges. However, and Mints (AGRM) has made a few
borrowed money only to have their the Bureau of Indian Standards (BIS) recommendations to the government
doré refined by toll refineries in created the India Good Delivery on the issues mentioned above,
countries such as Switzerland. Standards (IGDS) in 2020 to help which might be addressed to provide
support the government's objective India with world-class refineries and
of Atmanirbhar Bharat (Self-reliant eventually become the world's gold
Due to a lack of indigenous supply of
India). price setter.
dore or scrap, most Indian refiners
have to rely on imports of gold
dore, which regularly causes supply The Indian government should
interruptions. The limited availability promote an 'Indian Gold Delivery'
of dore on the global market is due (IGD), which would compete with
to the practice of captive mining LBMA certification in foreign and
in many gold-rich countries. Given domestic markets. If the correct laws
the circumstances, the majority of are in place, Indian refiners with IGD
Indian refiners, due to their small will be allowed to play a prominent
size and variable demand compared role under the Revised Gold
to the other players in the global Monetization Scheme (R-GMS).
dore market, cannot enter into a

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