NSE partners with Augmont to deepen electronic gold market, reduce reliance on imports

Synopsis

The National Stock Exchange (NSE) has partnered with Augmont Enterprises to boost the adoption of Electronic Gold Receipts (EGRs), aiming to build a deeper and more liquid spot gold market in India. The collaboration seeks to formalise the country's vast household gold holdings by enabling investors to trade, lend and redeem physical gold through a regulated exchange framework, while improving liquidity, price discovery and market efficiency.

The National Stock Exchange has partnered with Augmont Enterprises to expand the adoption of Electronic Gold Receipts (EGRs) as the exchange seeks to build a deeper and more liquid spot gold market in India.

The collaboration will leverage Augmont's capabilities in EGR creation, redemption, liquidity provision, delivery and price discovery. The two organisations will work to increase participation from investors, jewellers and other market participants.

EGRs, launched by NSE on May 4 this year, allow physical gold to be converted into exchange-traded, dematerialised securities that are held in investors' demat accounts. Investors can trade the receipts on the exchange, redeem them for physical gold or lend them through the exchange framework.

The initiative is aimed at bringing a larger share of India's privately held gold into the formal financial system. India is estimated to hold 30,000-35,000 tonnes of gold in private hands, much of which remains outside the organised financial ecosystem.

Under the EGR framework, investors can hold, trade, pledge, redeem and lend gold. Through the Securities Lending and Borrowing mechanism, EGR holders can lend their gold to jewellery manufacturers while continuing to retain ownership and exposure to changes in gold prices.

Also Read: Groww shares gain 8% on strong Q1 earnings, net profit jumps 94% to Rs 735 crore

The exchange said the development of a domestic EGR market could also help reduce India's dependence on imported bullion. Gold imports stood at about $71.98 billion in FY26. By mobilising domestically held gold through a regulated exchange platform, the system could improve the efficiency of the gold value chain and support broader economic objectives.

Sriram Krishnan, Chief Business Development Officer at NSE, said the EGR framework was designed to create a transparent and exchange-regulated marketplace for physical gold. He said greater participation by refiners and liquidity providers would help improve liquidity, standardisation and investor participation in the bullion market.

Augmont Director Ketan Kothari said EGRs could formalise India's vast household gold holdings by allowing them to be held, traded, lent and redeemed through a regulated exchange framework. He said combining digital access with exchange infrastructure could accelerate adoption of the product.

India Bullion and Jewellers Association National Secretary Surendra Mehta said EGRs could strengthen the organised gold market by offering exchange-based price discovery, guaranteed settlement, standardised quality and a lending mechanism that channels idle gold to jewellery manufacturers.

The partnership comes as India seeks to deepen its domestic bullion market and create formal avenues for utilising household gold, which has traditionally remained outside the financial system despite the country's position as one of the world's largest consumers of the precious metal.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

...moreless

...moreless