- National Stock Exchange (NSE) launched Electronic Gold Receipts (EGRs) backed by physical gold in SEBI vaults
- Trading starts May 18, Monday to Friday, 9:00 a.m. to 11:30 p.m., with T+1 settlement cycle
- EGRs represent digital ownership of certified gold stored securely and shown in demat accounts
The National Stock Exchange (NSE) has introduced Electronic Gold Receipts (EGRs), enabling investors to hold gold in electronic form backed by physical gold stored in SEBI-regulated vaults.
This system is designed to improve transparency, security and ease of access while reducing concerns related to purity, storage and theft that come with physical gold.
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The trading begins today (May 18), and the market will operate Monday to Friday from 9:00 a.m. to 11:30 p.m., extending to 11:55 p.m. during US daylight saving time. The settlement system will follow a T+1 cycle.
What is a gold EGR?
An EGR is a digital proof of ownership of physical gold stored in SEBI-regulated vaults. Each EGR represents a specific quantity of gold held securely under a regulated system. The gold is certified, standardised and managed by licensed vault providers.
Pros and Cons
The launch of EGRs by the NSE is a major change in India's gold market. EGRs let investors own gold in electronic form, while it is backed by physical gold kept in SEBI-regulated vaults. The ownership is shown in a demat account, similar to shares and other securities.
This is a major development in India's gold investment ecosystem as the precious metal has always been treated as a significant asset in Indian households. It is treated not just as an investment but also as a symbol of wealth and tradition. However, physical gold comes with issues like doubts about purity, storage problems, theft risk, and loss during resale. EGRs aim to remove these problems while keeping gold investment simple.
Like shares, EGR ownership is shown in a demat account through exchanges and depositories. One key benefit of this investment is the flexibility in investment size. Investors can buy gold in small or large units without needing to purchase physical bars. EGRs are available in different denominations such as 1 kg, 100 g, 10 g, 1 g, and even 100 mg, making gold investment more accessible.
EGRs are being seen as an important step in the transformation of India's gold ecosystem, but it comes with its own challenges. Liquidity remains a major concern at the moment. Broker platforms also need wider integration to improve access for investors. Another challenge is consumer behaviour, since many Indians prefer holding physical gold.
Should You Buy Or Not?
In an Instagram post, CA Lavanya Mohan explained that EGRs are different from other instruments because they can be redeemed for actual physical gold. This means investors can convert their electronic holdings into real gold whenever needed.
She explained that EGRs do not offer any special tax benefits. Instead, they provide flexibility to buy and sell at any time and also allow investors to take physical delivery of gold. These instruments are fully regulated by SEBI. But investors must note that vault storage charges apply, similar to paying for a locker facility. If an investor chooses physical delivery, a 3% GST is charged at that stage, she explained.
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