Gold industry body meets with Piyush Goyal to discuss forming a Bullion Bank

India’s jewellery industry has proposed establishing a regulated Bullion Bank as an institutional mechanism to reduce the country’s dependence on gold imports by mobilising idle domestic gold supplies. The proposal was discussed during a meeting between the Union Commerce and Industry Minister Piyush Goyal and representatives of the All India Jewellers and Goldsmith Federation (AIJGF). 

The AIJGF has urged the government to create a formal framework under which domestic gold held by households, institutions and investment vehicles could be standardised, mobilised and lent back into the jewellery ecosystem. The Minister has agreed to consider setting up a consultation committee to examine the proposed Bullion Bank frameworks.  The committee is expected to include representatives from the government, jewellery industry, bullion market, financial institutions and regulators.

The proposed Bullion Bank would function as a central institution through which domestic gold could be pooled, standardised, settled and lent. Households and institutional holders of gold would be on the supply side, while jewellers, exporters, refiners and manufacturers would form the demand side. The broader aim is to securitise and monetise what the industry describes as India’s vast stock of “idle gold” lying with households and institutions, thereby lowering fresh import demand for the precious metal.

The proposal gains significance at a time when India is grappling with pressure on its currency and foreign exchange reserves amid elevated crude oil and gold prices.