Exploring Bullion Banking: A Potential Solution for India's Forex Challenges
What Is Bullion Banking? Can It Help India Save Forex?
News 18
Image: News 18
In response to PM Narendra Modi's appeal to reduce gold purchases amid forex pressures, the jewellery industry fears significant losses. Jewelers propose establishing a bullion bank within India's International Bullion Exchange framework to mobilize and trade precious metals, potentially alleviating the country's gold import burden.
- 01PM Modi's appeal to reduce gold purchases could disrupt the jewellery industry.
- 02India imports 700-800 tonnes of gold annually, straining forex reserves.
- 03A proposed bullion bank could help mobilize idle gold held by households.
- 04Bullion banks generate revenue through trading and ancillary services.
- 05Strategic measures for the Gold Monetisation Scheme are being requested.
Advertisement
In-Article Ad
The Indian jewellery industry faces turmoil following Prime Minister Narendra Modi's appeal to refrain from gold purchases for a year to conserve foreign exchange reserves, which are under pressure due to the Iran-US conflict. With India importing 90% of its gold, jewellers warn that this could lead to substantial losses and threaten the livelihoods of hundreds of thousands. In response, they propose establishing a bullion bank within the India International Bullion Exchange framework. This bank would facilitate trading, storage, and lending of precious metals, including gold, silver, platinum, and palladium. Bullion banks earn revenue through various activities such as trading, custody, and financing. India imports 700-800 tonnes of gold annually, significantly impacting its current account deficit. However, Indian households hold an estimated 25,000-35,000 tonnes of gold, much of which remains unused. Mobilizing even 1-2% of this idle gold could reduce imports and ease forex pressures. Jewellers are urging the government to enhance the Gold Monetisation Scheme to encourage public participation and promote the circulation of existing gold within the economy.
Advertisement
In-Article Ad
The establishment of a bullion bank could stabilize the jewellery industry, protecting jobs and incomes while reducing the country's reliance on gold imports.
Advertisement
In-Article Ad
Reader Poll
Do you support the establishment of a bullion bank in India?
Connecting to poll...
More about International Financial Services Centres Authority
Read the original article
Visit the source for the complete story.


