What Is An Electronic Gold Receipt?

Electronic Gold Receipts or EGRs are a kind of Depository gold receipts traded on the stock exchange on stock exchanges. It is similar to shares, and they are kept in Demat accounts. As a substitute for the actual gold that is kept in vaults, any investor can purchase an electronic gold receipt. Investors can buy an EGR using their Demat account, It is the same process as you buy a stock. The purchasing and selling of EGR is comparable to stock trading.

It's just another security with a physical gold holding underneath. Similar to other securities, the electronic gold receipt can be cleared and sold. An additional benefit of the EGR is interoperability, which enables holders to request a physical gold withdrawal from any vault management.

SEBI gold exchange framework

SEBI Board in its meeting held on September 28, 2021 approved the framework for Gold Exchange and SEBI (Vault Managers) Regulations, 2021.

According to SEBI, "Government of India vide Gazette notification S.O. 5401 (E) dated December 24, 2021, has declared "electronic gold receipts" as 'securities' under Section 2(h)(iia) of the Securities Contracts (Regulation) Act 1956, and vide Gazette notification dated December 31, 2021, SEBI (Vault Managers) Regulations, 2021, have been notified, paving the way for operationalizing of Gold Exchange. The framework for the proposed Gold Exchange is listed at Annexure 1."

According to the Securities and Exchange Board of India (SEBI) gold exchange framework, vault managers who are SEBI accredited shall handle the e-receipts. Along with creating the EGRs, the vault managers are also in charge of other tasks like withdrawals, deposits, and complaint resolution. Physical gold for EGRs is obtained through imports, authorised domestic refineries, or designated delivery points.

Recent Development

In a recent development, India's first spot physical gold exchange product, the Electronic Gold Receipt (EGR), has been approved by the market regulator SEBI for the Bombay Stock Exchange (BSE).