Gold worth 10 thousand billion dollars is kept in homes! The country will benefit by bringing it into the financial system
New Delhi: India should bring the gold reserves held by households into the financial system. Former Union Minister P.P. Chaudhary and senior market officials said this on Wednesday and argued that keeping gold in physical form limits its role in economic growth. Chaudhary, a member of Parliament’s Standing Committee on Finance, said greater financialization of gold could reduce India’s dependence on bullion imports and reduce pressure on the current account deficit (CAD).
Speaking at a program of industry body ASSOCHAM here, he said that the gems and jewelery sector already contributes about 15 per cent to the country’s total merchandise exports and provides employment to about 50 lakh people. National Stock Exchange (NSE) Chief Business Development Officer Sriram Krishnan said that India’s homes and temples together have a total of 50,000 tonnes of gold, which is estimated to be worth about $10,000 billion and a large part of it is outside the formal financial system. “We have the platform, the capacity and the technology,” he said, urging the government to remove barriers to financialization of gold through Electronic Gold Receipts (EGR). EGR is a Securities and Exchange Board of India (SEBI)-backed instrument under which consumers can deposit physical gold and use it to trade on the stock exchange like shares.
Krishnan said the three per cent Goods and Services Tax (GST) levied on gold deposits under the EGR framework is the biggest hurdle in its widespread use. To solve this problem, NSE has also presented a white paper. Jitin Makkar, senior vice president of rating agency ICRA Limited, said that in the last two financial years, gold prices have increased by about 30-30 percent, due to which there is a discussion on bringing gold into the financial system. He said that despite the sharp rise in prices, demand for jewelery remains strong. Major retailers have recorded double-digit revenue growth and expanded their store count by nearly 20 per cent in fiscal years 2024-25 and 2025-26. Makkar said that the risk of ‘gold loans’ given by banks and non-banking financial companies has increased from about Rs 1 lakh crore to Rs 4 lakh crore in recent years. He said that regulatory measures like mandatory hallmarking and ‘Indian Good Delivery Standard’ have increased confidence in the bullion produced in the country, which has also reduced the dependence on imports to some extent.
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