Skip to main content

Regulatory board for gold gets Finance Ministry nod, ball in PMO court

The finance ministry has given its nod to set up a precious metals’ board to bring clarity on how the new comprehensive gold policy will be implemented. The proposed board, to be known as the Precious Metals Board of India, will be the regulatory body for gold, silver, platinum, palladium and other commodities the government notifies. During a meeting of government officials and industry stakeholders in New Delhi, the plan to set up the board was finalised and a proposal on this will be sent to the Prime Minister’s Office in a day or two, said a source. 
The board is expected to have a chairman, two whole-time members, two part-time members from the finance ministry and one member each from the Securities and Exchange Board of India (Sebi), the commerce ministry and the warehouse regulator. The plan to constitute such a board was under consideration for long. The finance ministry had set up a high-level panel to discuss its formation. The panel included representatives from Sebi, Bureau of Indian Standards or BIS, the India Gold Policy Center (set up by IIM-A), bourses and the World Gold Council. Its first meeting was held on December 27.
Chart A panel headed by NITI Ayog member Ramesh Chand on spot and futures trading had proposed a separate regulator for spot trading. Another NITI Ayog panel on gold policy had also proposed the setting up of a gold board but as an advisory body. The proposed body is likely to be formed on the lines of the Ramesh Chand Committee. The board will be set up after passing an Act in Parliament. Till that happens, a transitory arrangement will be made by the ministry and the board may work as a division of the Union Ministry of Finance.
In the past, regulators like the Forward Markets Commission, Controller of Capital Issues and even Sebi were set up under the jurisdiction of their respective ministries. Initially, the board will start preparing a road map for implementing the gold policy. It will be deciding details for launching gold contracts on the proposed spot exchange and modalities for setting up the exchange. It will even take a call on regulating bullion refineries and vault service providers. 
Bullion banking will be another area in which the board will decide details, said the source. Bullion banking is to introduce financial instruments and link them with gold. The board will be subject to audit by the Comptroller and Auditor General or CAG and the board’s decisions can be challenged in the Supreme Court. Bullion refineries are now fulfilling 50 per cent of the domestic refined gold demand but they are not regulated. BIS is the licensing authority for them and its rule is to ensure purity and check processes. However, a need was felt since long to regulate bullion refineries for which the board will prepare broader guidelines and regulations.
The proposed board will be the regulator for refineries and even vaulting services. Since the board will also regulate spot exchanges for trading in precious metals, it will also regulate other intermediaries like repositories (record-keeping agencies) and the clearing corporation (for clearing and settling trades on the exchange).
The Business Standard, 27th March 2019


Popular posts from this blog

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…

RBI rushes in to prop up falling rupee

RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…

SC order on RBI circular: More options for banks to tackle defaulting firms

Lenders also have the option of restructuring the loans Lenders to companies which are under stress could now have three options to deal with them if they default on loans: take a haircut as part of a one-time settlement, restructure the loans for a longer tenure as they did when corporate debt restructuring schemes were allowed, or go to the Insolvency and Bankruptcy Code (IBC) for redress. These changes in the options available to lenders come, according to PE funds and bank lawyers who are involved in the IBC process, in the wake of the Supreme Court on Tuesday setting aside the 12 February RBI circular, which allowed a 180-day window to banks to resolve a company default.But they can still find a resolution. According to a Reserve Bank of India circular, a loan becomes a non-performing asset when banks cannot find a way of recovering their money in 90 days. In short, banks still have a window to resolve the default. Lenders can take a haircut as part of a one -time settlement of du…