SEBI wants holistic BIS norms for gold refiners

Capital and commodity market regulator SEBI has urged Bureau of Indian Standards (BIS) to come out with LBMA-like norms for refiners producing India-refined gold and exchange-accredited gold refiners.

NSE has recently approved a few Indian refiners recycling domestic gold as per BIS standard for delivery on the exchange platform starting September 1.

SK Mohanty, Whole-time Director, SEBI, said BIS should come out with a comprehensive set of rules which can be mandatorily followed by exchanges and refiners over and above their mutual agreed terms.

Currently, he said India gold delivery standard of BIS is heavily loaded on technical parameters. The new BIS norms should be something like that of London Bullion Metal Association including governance features such as networth of refinery, operation standard, minimum quantity of production and KYC norms, he said.

If BIS lays down such norms, then SEBI can instruct all exchanges to comply with it. This will boost investors’ confidence in gold being delivered on the exchange platform, he said.

Shanghai gold

Mohanty said non-LBMA accredited refiners in India command a market share of 50-55 per cent, which makes it clear that there is a market for India refined non-LBMA gold.

A day will come when people will adopt BIS bars and gradually India’s dependence on imported LBMA bars will decrease. Banks in China have made Shanghai gold a success story because they were mandated to buy and sell gold through Shanghai Gold Exchange. “Even though it is not mandated in India we can encourage banks to deal with gold through the exchange platform,” he said.

“We need a perception change across the value chain and it can happen by ensuring credibility, changing perception and good governance will India refined gold a success,” he added.

Base metals

Going forward, SEBI would like to have Indian standard for base metal, ferrous and non-ferrous, he said.

Vikram Limaye, Managing Director, NSE, pointed that the development will lead to greater organised trade, formalisation and recognition that the refiners in the country are capable of producing world class bullion bars, he said.

While India has been the consuming hub for refined gold, the origins of the bars, however, are from Switzerland, Dubai, Turkey or South Africa, he said.

Somasundaram PR, Managing Director, World Gold Council, said the decision of NSE to allow delivery of India refined gold on its platform poses huge responsibility on all refiners and stakeholders to ensure not only good governance across value chain but also make sure it is known to the world.