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After the Bombay Stock Exchange (BSE) launched Electronic Gold Receipt trading, the National Stock Exchange is expected to introduce EGR trading on its platform too. Capital markets regulator Sebi is working out some taxation issues related to the product with the Central Government.

"It is a new segment. The BSE has come forward. The NSE is likely to do it shortly. We are working on the proposal," Sebi Executive Director VS Sundaresan said.

Speaking about the EGR, the Sebi Executive Director further told PTI that this product has been introduced by the markets regulator and BSE has launched it about a month back and "we hope that this product will definitely gain traction over a period of time".

"Under this product, what is proposed is that the physical gold is to be deposited in a vault, that vault manager will issue an electronic receipt and this will be credited to the demat account of the investor, that receipt can be traded on the stock exchange," the Sebi Executive Director said on Thursday.

Sundaresan further said that the gold will remain in a vault but it will generate some sort of income and the unutilised gold can be put to productive use.

All about EGR trading

Trading of EGR is similar to buying and selling of stocks. They (Electronic Gold Receipts) are issued in exchange for physical gold (similar to physical form of equity shares).

EGRs, the depository gold receipts traded on the stock exchanges, are held in Demat accounts, same as shares.

Electronic gold trading in India happens through gold derivatives or gold exchange-traded funds (ETFs) on the BSE/NSE. EGR is the first spot physical gold exchange trading product.

EGRs will cater to all market participants. This means that buyers and sellers on the BSE or NSE will include individual investors, as well as commercial participants along the value chain such as importers, banks, refiners, bullion traders, jewellery manufacturers and retailers.

The BSE has introduced two new products of 995 and 999 purity during the Muhurat trading on Diwali.

In a statement, the BSE had said that trading can be done in multiples of 1 gram and deliveries in multiples of 10 gram and 100 gram.

On tax related issues

The Sebi Executive Director said there are some tax related issues, which need to be ironed out, saying: “We are working with the ministry and we are hoping that this product will make gold trading more transparent and more satisfactory for investors."

"We are hoping that this will help the unutilised or the physical gold which is lying idle can be converted into more economically tradable form," Sundaresan said at an Assocham summit.

Sundaresan further said India meets 89% of its gold demand from imports. In FY23 up to June, the country's gold imports stood at more than 81,100 crore.

"This large demand of gold imports has adverse impact on CAD and further implications on the external sector stability," Sundaresan noted.

With agency inputs

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