The National Stock Exchange (NSE) has today formally launched the Electronic Gold Receipts (EGR) segment. This revolutionary initiative will bring India’s huge but unorganized gold market onto a secure, transparent and regulated digital platform. This step is a major milestone towards bridging the gap between the age-old ‘physical gold’ tradition and the modern ‘financial market’.
What is EGR and how does it work?
EGR is a type of digital security, which directly reflects the ownership of physical gold. This gold is kept completely safe in SEBI approved vaults and is held in electronic form in your demat account through the depository. Every receipt is linked to pure gold, which can be easily bought and sold like shares on the stock exchange.
Successful ‘dematerialization’ of 1 kg gold
At the launch, NSE demonstrated its technological capability by successfully converting one gold bar (1000 grams) into an Electronic Gold Receipt (EGR). This experiment proves that physical gold can be safely converted into a digital instrument and is fully ready for delivery-based trading.
What will be the benefit to investors and the market?
Uniform pricing: Dependence on different benchmarks scattered across the country will be reduced and transparent pricing will be possible.
Small investment opportunity: Investors will now be able to invest in small portions of gold, which will make it easier for common people to access the gold market.
High liquidity: Being in digital form it can be converted into cash at any time, just like you sell shares.
Institutional trust: Trust in transactions between jewellers, refiners and traders will increase as the entire process will be under a regulated framework.
Leadership response
Commenting on the occasion, Shriram Krishnan (CBDO, NSE) said that the launch of EGR is an indication that India will now connect with its most favorite asset ‘Gold’ in a modern way. Our aim is to make gold investment easy, secure and digital so that it becomes an integral part of the capital market. This will not only increase transparency, but more and more people will be able to become part of the formal financial system.
SK Sharma is a content writer who writes on news, entertainment, and lifestyle topics. She has over four years of experience and is known for conveying information in simple and clear language.
