Sriram Krishnan, chief business development officer, NSE, who was in Chennai on Saturday as part of the exchange’s IPO roadshow, said EGRs could unlock a huge pool of gold lying with households, temples, investors and jewellers. “We have about 25,000 tonnes of gold with individuals and maybe another 25,000 tonnes in temples. If we can dematerialise the gold and convert it into EGR, then that EGR can be traded on the exchange,” he said.
The EGR will represent standardised gold after the metal is deposited at authorised collection centres and tested for purity and authenticity. It can then be held in a demat account, traded, lent or used as collateral, while investors can surrender the receipt to take delivery of the underlying gold.
“When you buy gold, you pay 3% GST, but when you buy and sell EGR, there is no GST because EGR is a security,” Krishnan said. For jewellers, he said, EGRs could also free up working capital. Instead of buying and holding a kilogram of gold that could take months to consume, a jeweller could buy smaller quantities of EGRs and convert them into physical gold as required.
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