Last evening, on Independence Day, I was watching the web-series ‘Governor’ on an OTT platform. It would have reminded people in my age group of the economic crisis in the early 1990’s, when India had to pledge its gold to secure foreign exchange. This action guaranteed that the RBI & India as a whole do not default on their commitments. As a nation, we pledged our gold to tide over the economic crisis.

Our Indian households have always believed in monetisation of their Gold. The size of the loan book of Indian Banks and NBFCs, with gold as the primary security, is a testimony to this.

Now, we have to take the next step towards financialisation.

At the Global Commodity Conclave organized by MCX earlier this week, I was moderating a panel discussion on the financialisation of gold. In this discussion,  we were trying to achieve two objectives:

Reducing India’s large import bill on gold

Unlocking a part of the huge gold capital (of over 30,000 tones) with Indian households. At current international prices, this would be equivalent to USD 4.22 Billion. For context, this is larger than the entire banking sector’s deposits

There are a lot of gold-linked savings and investment products in the market now. The next goal is for these products to mature into easy fungibility, to unlock the true potential of the gold savings we hold in our households & trusts.

Gold deposits, Gold EGR and other digital gold products will all help in this direction. With exchanges and all the stake holders of the India gold market accepting India Good Delivery i.e gold refined at local refineries certified by BIS , we are ready for a giant leap.

Let’s all work together to achieve the Indian Government’s objective to reduce fresh gold imports to preserve foreign exchange and prepare for a giant financial leap.