No link between EGR launch and PM Modi's appeal to avoid gold purchases; product planned months in advance: NSE's Sriram Krishnan
Coimbatore, June 6
The National Stock Exchange's newly launched Electronic Gold Receipts platform is not linked to Prime Minister Narendra Modi's recent appeal urging citizens to postpone gold purchases for a year, as the initiative had been in the works for several months before the current geopolitical developments, NSE Chief Business Development Officer Sriram Krishnan said.
Speaking to ANI, Krishnan said the EGR platform, launched on May 4, was conceived as a long-term mechanism to reduce India's dependence on gold imports and create a unified domestic gold market.
Addressing speculation that the launch coincided with the Prime Minister's call to reduce gold consumption amid external pressures, Krishnan said, "This was a planned launch anyway. We wanted to reduce the import of gold through the EGR concept."
He clarified that the timing was purely coincidental.
"It may appear that it's a very calculated launch... No, it is not connected. This is a planned launch anyway," he said.
Krishnan, however, said both efforts share a broader objective of reducing gold imports.
"The Prime Minister's request to the country is for people to not buy gold for a year. That's absolutely the right thing to do to reduce the imports. Now, this is another attempt to reduce the imports of gold," he said.
Explaining the rationale behind EGR, Krishnan said the product aims to bring idle domestic gold into the formal financial system.
"The objective of electronic gold receipts, or EGR, is to dematerialise gold, get the local supply of gold which is already available in the country into the market, and thereby help reduce import of gold," he said.
He added that the platform could also help India gradually emerge as a price-maker in the global gold market by creating "one single market for the whole country."
According to Krishnan, market response to the product has been encouraging.
"The response has been overwhelming. Almost all the stakeholders have expressed great admiration for the product," he said, while noting that supply creation remains the next key step before active trading gains momentum.
Krishnan estimated that India could see 100-200 tonnes of gold converted into EGRs in the first year.
"India imports about 700 tonnes of gold every year. If what we are seeing comes true, then about 100 to 200 tonnes of imports can be avoided," he said.
He said the initiative could trigger a larger behavioural shift over time, given estimates that around 50,000 tonnes of gold are already held in Indian households and temples.
Krishnan also said investors should start seeing EGRs on brokerage platforms within the next two to three months as market infrastructure and systems are being readied.
"Very soon, you'll see actual usage of EGR coming into play," he said.
— ANI
Reader Comments
Interesting move by NSE. From a global markets perspective, India is the world's second-largest gold consumer, so creating a unified domestic market could potentially help set international prices. But implementation is key—will the liquidity be there? Will the tax treatment be clear? These are the real questions.
Honestly, I understand the Prime Minister's appeal to not buy gold for a year, but as a woman, gold is literally part of our wedding traditions and financial security. My mother always says "sone ka bharosa kuch aur hota hai." Digital gold receipts might work for investors, but for the average household, physical gold still feels safer. Need more awareness campaigns.
100-200 tonnes reduction in imports in the first year would be fantastic for our current account deficit. But implementation should be seamless. And I hope the EGR system is foolproof against fraud—we've seen issues with other digital assets in India. Transparency in pricing and storage will be crucial for building trust with retail investors like me.
Ek baat toh clear hai—this was planned long before PM's appeal. NSE wouldn't launch a product in a month. But both initiatives are complementary, that's good. My concern: will temple trusts actually convert their gold holdings into EGRs? That 50,000 tonnes includes temple gold which has religious and legal complexities. Let's be realistic about that number.
As someone who has traded commodities globally, this is a well-thought-out move. Dematerialising gold will help with price
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.