gold exchange Archives

BPCL to set up 1,000 EV charging stations

Bharat Petroleum Corporation Ltd (BPCL) plans to add 1,000 electric vehicles (EV) charging stations in the short term. The company aims to tap new business opportunities as a hedge against the displacement of auto fuels. BPCL will offer multiple fuelling options at 7,000 petrol pumps to facilitate owners of vehicles powered by gas, electricity, and hydrogen. It also plans to spend Rs 5,000 crore to build its renewable power portfolio of 1,000 megawatts (MW) over the next five years.

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TCS secures 5-year contract from German bank NORD/LB

Tata Consultancy Services Ltd (TCS) has secured a five-year IT transformation contract from NORD/LB, a leading German commercial bank. TCS will work with the bank to simplify and transform its application estate across multiple businesses through application consolidation and automation. The IT major will also build new features and functionality to support NORD/LB´s transformation goals.

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BHEL secures order from Goa Shipyard for warship gun mount

Bharat Heavy Electricals Limited (BHEL) has secured an order from Goa Shipyard for a warship gun mount. The order includes the supply of an upgraded Super Rapid Gun Mount (SRGM), which is the main gun onboard most warships of the Indian Navy. The upgraded SRGM is a state-of-the-art weapon system that comprises features such as the capability to manage different types of ammunition to engage fast, radio-controlled targets.

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Sun Pharma launches cough syrup Chericof 12 in India

Sun Pharmaceutical Industries announced the launch of a novel formulation in cough management— Chericof 12 in India. It is the first prescription cough syrup in India that gives relief for up to 12 hours. Chericof 12 is manufactured using polistirex technology for sustained release of the drug. The technology helps in improving patient compliance and avoids the need for frequent dosing.

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RVNL secures order worth Rs 382 crore for Indore Metro Rail Project

Rail Vikas Nigam Ltd (RVNL) has secured a contract from the Madhya Pradesh Metro Rail Corporation worth Rs 381.95 crore. The contract is for the design and construction of seven elevated metro rail stations of the Indore Metro Rail Project. RVNL will construct the viaduct portion within the stations and transition spans on either side of the stations, entry-exit structures, etc.

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SEBI board approves framework for gold exchange

The Securities Exchange Board of India (SEBI) has approved the framework for gold exchange. The instrument representing gold will be called Electronic Gold Receipts (EGRs) and will have trading, clearing, and settlement features similar to other securities. The proposed gold exchange would lead to efficient and transparent domestic spot price discovery, assurance in the quality of gold, and augment gold recycling in India.

SEBI has also approved the creation of a Social Stock Exchange (SSE), which will help social entrepreneurs raise funds.

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SC rejects Adani Gas’ plea seeking authorisation for city gas distribution network in Ahmedabad district

The Supreme Court (SC) has rejected Adani Gas Ltd’s plea challenging the bidding process for the supply of PNG and CNG in Sanand, Bavla, and Dholka of Ahmedabad district. The SC also upheld the authorisation provided by Petroleum and Natural Gas Regulatory Board (PNGRB) to Gujarat Gas Ltd for establishing and operating the city gas distribution network in the areas adjacent to Ahmedabad. Further, the court imposed Rs 10 lakh cost on Adani Gas.

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IndiGo signs code-sharing agreement with American Airlines

InterGlobe Aviation (IndiGo), India’s largest airline, has signed a code-sharing agreement with American Airlines. The US airline is gearing up to launch new flights between the two countries. Code-sharing allows an airline to sell seats on a flight operated by its partner, such that it can fly passengers to destinations it does not serve. The agreement, expected to start in October, will see American Airlines’ code on 29 of IndiGo’s domestic routes in India.

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Bal Pharma to strengthen its position in diabetes segment via Gliclazide API

Bal Pharma Ltd is further strengthening its market-leading position in the diabetes segment via Gliclazide (API) with higher capacity utilization at the existing facility. The company will also streamline the new facility that commenced production of Gliclazide in September 2020. The pharma company is one of the largest producers and exporters of Gliclazide active pharmaceutical ingredient (API), used to treat Type-2 diabetes. Bal Pharma is a fully integrated pharmaceutical company specialized in Prescription Drugs, Generics, pharma intermediates, and Bulk Actives.

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Anupam Rasayan signs contract worth Rs 145 crore with European customers to supply active ingredient

Anupam Rasayan India has signed a Letter of Intent (LoI) worth Rs 145 crore with existing long-term European multinational customers for supplying a new life science-related active ingredient. The company will enter into a long-term contract for the next three years to supply the specialty chemical product. Anupam Rasayan manufactures products for over 66 domestic and international customers, including 24 multinational companies.

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SEBI’s Proposal

India is the second-largest consumer of gold after China, with an annual demand of 800-900 tonnes. We are net importers of the commodity as our gold mining industry is very small or insignificant. Buying gold is considered to be a good omen amongst most Indians, and it does have its own set of benefits. Due to the risks associated with owning physical gold, many are now buying or investing in digital gold and gold ETFs. However, despite securing an important position in global markets, there is no concrete system in India to discover or influence the price of gold.

This is the issue that SEBI wants to address. Through a consultation paper titled “Gold Exchange in India and Draft SEBI (for Vault Managers) Regulations 2021”, the market regulator has proposed to set up a trading exchange for gold in India. Similar to the stock market, where you buy and sell shares of listed companies, a gold exchange will allow you to trade electronic receipts that will have physical gold backing them. When a large number of people buy and sell gold and negotiate on its price, it could provide a better estimate of the true value of gold at a point in time. This can be compared with prices at international gold exchanges or forums and could help us discover the true price of gold.

Retail investors, banks, foreign portfolio investors (FPIs), jewellers, and bullion dealers would be allowed to trade on the gold exchange.

How Will it Work?

When authorized institutions or people import gold into India, the deposits are stored in secure vaults. The owners of these deposits could choose to convert their physical gold into Electronic Gold Receipts (EGRs). For this, the gold has to meet certain standards, and the owner (or vault manager) has to record all relevant information regarding it. They will have to forward and save this data in a common digital interface. Thus, physical gold is converted into digital receipts and is documented on a secure network. Then, a unique code has to be assigned to EGRs so that they can be traded. This unique code is termed as International Securities Identification Number or ISIN.

In India, we have two main depositories that are responsible for maintaining information about tradable financial instruments (such as stocks and bonds). It is the National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL). It is these depositories that assign a unique code to the EGRs. Finally, you will be able to trade these EGRs on the exchange. At the end of each trading day, the important stakeholders will make sure that all gold is accounted for.

According to the consultation paper, SEBI will be the sole regulator of the gold exchange. There will be three important operations performed at the exchange:

Conversion of physical gold to Electronic Gold Receipts (EGRs)

Trading of EGRs, and

Conversion of EGRs to physical gold.

What is the proposed unit of each EGR?

In the consultation paper, SEBI states that the gold exchange should have EGRs of 1 kilogram, 100 grams, and 50 grams. They might also allow EGRs of smaller denominations, including 10 grams and 5 grams, in the future.

SEBI had already formed working groups to test the transaction flow from physical gold to EGRs and vice versa. They have studied the role of different entities in the flow, such as vault managers and depositories. These groups have also suggested means of verifying the purity of gold and other safety and security measures.

Key Issues/Drawbacks

As mentioned in SEBI’s consultation paper, there are certain drawbacks with respect to this concept. Gold is a commodity and one should ideally be able to exchange the EGR for physical gold. However, this is only possible if a trader has a substantial amount of receipts (or EGRs).

Suppose you are holding 50-gram EGRs and wish to exchange them for physical gold. The vault manager (who holds and manages the physical gold) has to terminate the receipts, request the depository to cancel the entry from their database, and then send 50 grams of gold to you. This has to be done every time a person wishes to convert their EGRs to physical gold. It is a rather long and time-consuming process.

Taxation is another key issue. When EGRs are traded on an exchange, a Securities Transaction Tax (STT) will be levied. Also, GST will be applicable when EGRs are converted into physical gold. However, if the buyer and seller are from different states, the application of state GST will be very complicated. SEBI has suggested that levying Integrated GST (IGST) could resolve this issue.

You can read SEBI’s consultation paper here. Since the proposal is in the consultation phase, you can even mail them your views and ideas on the gold exchange. Let us look forward to seeing how SEBI implements its plans. We will soon be able to trade gold!