Bullion BankImage Credit source: ai generated
Indian families have a special emotional attachment to gold. For generations, we have been saving a large part of our hard-earned money in safes by investing it in the form of gold jewelery or biscuits. But, this precious metal kept in the locker is of no use to the country. Now a big preparation is going on to bring this dormant gold into the mainstream of the economy. A proposal to open 'Bullion Bank' in the country has reached the government. If this scheme is implemented, then the gold kept in your home will not only be a safe investment, but it will also work in the market.
India is mainly dependent on foreign markets to meet its huge domestic demand for gold. Statistics show that every year we import about 700 to 800 tonnes of gold. The country spends approximately Rs 7 lakh crore ($72.4 billion) on this import. This is a huge amount which has a deep impact on our foreign exchange reserves. To deal with this challenge, All India Jewelers and Goldsmiths Federation (AIJGF) has submitted a detailed proposal to Union Commerce Minister Piyush Goyal. It has been demanded that instead of suppressing the demand for gold, the gold present within the country should be used wisely.
The main goal of this new bullion bank framework is to take out the worthless gold lying in the treasuries of Indian homes, big religious places as well as gold ETFs. This gold will be launched in the market through this banking system. Jewelers will get direct benefit from this. Jewelers, refiners and exporters will be able to get this gold on loan (lending channel) to run their business. When only domestic gold will be available in the market, the need to import new gold from outside will be greatly reduced. With this the country's foreign exchange reserves will also be safe.
In today's time, when we go to the bank, we either keep the gold in a safe locker or take a loan (gold loan) against it if needed. In both these situations, that gold remains completely inactive from the economic point of view. The concept of Bullion Bank will completely change this old system. The gold deposited in it will be seen as an active currency. Instead of remaining locked in the safe, it will circulate directly in the market, which will make the business wheels turn faster.
Jewelers Federation clearly believes that the implementation of bullion banking model will create a strong gold supply chain. To implement this, the Federation has requested the government to form a joint advisory panel. Policy makers and industry veterans will be included in this panel. Their job will be to ensure that a transparent, secure and strict regulatory framework is created for the operation of Bullion Bank, so that the general public has confidence in this new system.
