Prime Minister Narendra Modi is set to finally inaugurate the India International Bullion Exchange (IIBX) at the Gujarat International Finance Tec-City (GIFT City) on Friday.
IIBX will be India’s first international bullion (high purity gold in physical form like bars and coins) spot exchange that has been set up at the international financial services centre (IFSC). It will allow qualified jewellers to import bullion and carry out transactions of the same on the exchange.
The Niti Aayog, back in 2018 had suggested setting up bullion spot exchanges “that would provide an efficient and trusted ecosystem for trading gold and ensure the success of financialisation of gold, with an aim to improve market transparency, protect the interests of market participants and facilitate India to emerge as a price setter for gold.”
Subsequently, IIBX was announced by finance minister Nirmala Sitharaman in the 2020-21 Union Budget and regulations for the same were notified in December 2020.
A holding company—India International Bullion IFSC Limited—was created following a memorandum of understanding (MOU) between National Stock Exchange (NSE), India INX International Exchange, Multi Commodity Exchange (MCX) and the two depositories including NSDL and CDSL.
This entity was tasked with setting up and operationalising the bullion exchange, clearing corporation and bullion depository in the GIFT City. A pilot project was launched in August last year and the exchange was expected to go live in October 2021, the foundation day of IFSC, but was delayed until now.
The finance ministry says IIBX will be the “gateway” for bullion imports to India. All the bullion imports for domestic consumption is expected to be channelised through this exchange.
“The exchange ecosystem is expected to bring all the market participants at a common transparent platform for bullion trading and provide an efficient price discovery, assurance in the quality of gold, enable greater integration with other segments of financial markets and help establish India’s position as a dominant trading hub in the world.”
One kilo gold of 995 purity and gold mini in 100 gram and of 999 purity will be traded initially at the IIBX. As per IIBX norms, the settlement will be T+0, that is, there will be 100 per cent margin and trades will be settled the same evening.
In both the cases, quality specifications stipulate serially numbered gold bars supplied by LBMA (London Bullion Market Association) approved suppliers or other suppliers as may be approved by IIBX to be submitted along with suppliers quality certificate.
The imported gold will be stored with regulated vault managers.
IIBX members include Globe Capital IFSC, Motilal Oswal Finsec IFSC, Anand Rathi International Ventures IFSC, SMC Global IFSC, Stockholding Corp. of India among others.
Currently there are 64 jewellers registered on the IIBX. These include Augmont Enterprises, Banglore Refinery, Kalyan Jewellers, MMTC-PAMP, Malabar Gold, PN Gadgil Jewellers, Raksha Bullion and Titan among others.
In May, the Reserve Bank of India issued guidelines to enable qualified resident jewellers to import gold through IIBX.
As per the guidelines, banks can allow qualified jewellers to remit advance payments for eleven days for import of gold through IIBX in compliance to the extant foreign trade policy and regulations issued under IFSC Act. The advance remittance for import of gold should not be leveraged in what-soever form for importing gold worth more than the advance remittance made, the RBI guidelines stated further.
