Page 35 - Bullion World Issue 1 May 2021

Bullion World | Issue 01 | May 2021

translation of liabilities / assets with modalities for GMS- linked Gold in-hand. To implement change,
RBI and simultaneously takes the Metal Loan. Here again participating banks will need to transcend from
liability off its balance sheet. entities will need to clarify to IBA to treating gold as a mere commodity
• PE jeweler receives the 1.5% enable the latter issue appropriate to treating it as a financial asset i.e.
reimbursement for the gold what is globally termed as Bullion
mobilized on date gold loan is guidance. Banking along with establishing
settled. • In the longer-term pipeline is the a centralized gold clearing
acknowledgement that a GMS mechanism. This enables Banks
e-platform needs to be developed focus on their core competence,
OVERVIEW which will provide a secure viz. currency and credit, leaving
online workflow solution for the
entire process by integrating all the physical to be handled by
• Gold Monetization process: The participating entities including, but agencies competent to do so. A
whole process becomes single not limited to, Collection Centers, Spot Commodity Exchange and
point, Customer & GMS value chain Banks, the Regulatory Bodies and an acceptable Good Delivery
friendly for mobilizing household the Depositor. Technology will be Standard of the underlying asset
gold, with an option to integrate the key to implementing a new-look is co-terminus with this change.
GML with GMS. consumer-friendly GMS. India’s journey of integration with the
• Demat: GMS deposit certificate can • In short, some significant progress way gold is managed globally will
also be held in De-mat form akin to but lots more to be done. The road also need to address challenges of
SGB de-mat holding. map is clear; the euphoria may take domestic gold mining and refining.
• Transferability: The GMS deposit Increasing use of technology in
certificate becomes freely some time. the gold market’s infrastructure will
transferable on par with norms for drive efficiency and transparency in
any security/financial document gold, be it in its purchase, storage,
transfer. CONCLUSION clearing and accounting, whilst
• Borrowing: Borrowing can be simultaneously inspiring confidence
permitted against charge created • In February 2018, Government in the consumer.
on GMS deposit receipts as per announced in its budget that it • The Covid pandemic has indeed
applicable schemes of the lender. would develop gold as an asset impacted this work-in-progress, as
• Banks neither handle physical gold class, revamp the gold monetisation it has with many other conflicting
nor are the sole driver of GMS. scheme and develop a gold spot economic priorities. We need to
• No cost to / involvement of / policy exchange, all essential for gold to be understanding, patient and
change by Government. complete its journey from Illegal to supportive.
Underground to Legal.
• Asset class and banking go hand-
IMPLEMENTATION

• RBI Master Direction updated on Rajesh Khosla
April 05, 2021 now includes jewelers
meeting eligibility criteria conditions Associated with the Indian precious metals industry for over twenty –five years.
set by Indian Banks Association Is widely respected for his in-depth knowledge and understanding of commercial
(IBA) to function as GMS realities of the Indian gold market value chain.
mobilization, collection and testing
agents of participating Banks. It has Managing Director MMTC-PAMP India since its inception in 2008 till August 2017,
further reduced the minimum gold
on deposit from 30 gms to 10 gms. when he stepped down on attaining the age of seventy-five. As Chairman-Emeritus
Banks may open zero balance gold he continues to advise and guide the company in its quest for sustained excellence
deposit accounts prior to tendering in precious metals. Former President, Association of Gold Refineries & Mints
gold. (AGRM), and currently National Vice President & member of Governing Board of
• However, the issues related to Indian Bullion & Jewellers Association (IBJA).
handling small quantities of gold
(note that minimum quantity MMTC-PAMP India is India’s first and only London Bullion Market Association
has been reduced to 10 gms) (LBMA) accredited Good Delivery Refinery for Gold and Silver, maintains an LBMA
remain. Whether these will be Responsible Gold Compliance Certificate and is one of only two precious metal
addressed by IBA in its interaction refineries in the world holding SA 8000 certification.
with participating entities, or
through a subsequent clarification, Having steered MMTC-PAMP India for LBMA Good Delivery accreditation, he is
remains to be seen. It is hoped
that IBA will, basis its interaction spearheading the interaction between industry and Govt. to establish an India
with participants, come up Good Delivery eco-system and developing Responsible Gold Compliance to enable
with its recommendations for Indian refineries aspire for LBMA Good Delivery Accreditation. He is frequently
implementation. consulted on policy issues related to development of Bullion industry in India,
• There is need to clarify the including participation in industry conferences, conventions and seminars in India
and overseas.
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