Page 30 - Bullion World Volume 03 Issue 6 June 2023

Bullion World | Volume 3 | Issue 6 | June 2023

IFSCA: Regulators’ role in shaping

financial services and development

of IIBX at GIFT City

Mr Kamlesh Sharma, GM and Head, Precious Metals Department, IFSCA

IFSCA shall soon be issuing enabling guidelines for Gold Loans / Leasing and investment products in Bullion
Depository Receipts (BDRs). As the Government of India (notification issued on August 3, 2022) has exempted
income arising out of trading in BDRs from capital gains tax for non-resident individuals and foreign companies,
IIBX shall pave the way for greater financialization of gold as an asset class.

About GIFT-IFSC in-house centres, fund management,
India's first International Financial fin-tech, and precious metals.
Services Centre (IFSC) was
established at Gujarat International Establishment of a bullion
Finance Tec-City (GIFT City) in exchange at GIFT-IFSC
Gandhinagar. Although the idea The establishment of the
was first mooted in 2007 and the International Bullion Exchange
groundwork for building GIFT City at GIFT-IFSC has its roots in the
commenced in 2011, the GIFT-IFSC February 2018 Report of the NITI
became operational in April 2015. Aayog – constituted Committee
on Transforming India’s Gold
In April 2020, the International Market. The objective was to
Financial Services Centres Authority create a centralised platform for
(IFSCA) was established as an gold imports and exports that Mr Kamlesh Sharma
independent unified regulator for would function as the primary
businesses and entities in IFSCs intermediary. Such an exchange
in India under the International would provide a standardised and Multi Commodity Exchange, National
Financial Services Centres efficient trading environment for Stock Exchange, and Indian INX
Authority Act, 2019. The IFSCA, gold market participants for price Exchange (a subsidiary of BSE
headquartered in GIFT City, discovery and potentially position in GIFT-IFSC), CDSL and NSDL
Gandhinagar, is vested with the India as a significant player in setting came together to form a holding
powers under the relevant statutes international gold prices. company to establish the India
(mentioned in the First Schedule International Bullion Exchange and
to the IFSCA Act) exercisable by The IFSCA endeavoured to set the the Clearing Corporation [viz. India
the four financial sector regulators groundwork by bringing the IFSCA International Bullion Exchange IFSC
in India viz, RBI, SEBI, IRDAI, Bullion Regulations and creating Ltd. (IIBX)]. The holding company
and regulate financial institutions, the necessary infrastructure for later took control of the depository
services, and products in IFSCs. bullion trading. The IFSCA Bullion in GIFT-IFSC which was renamed
Regulations permitted the bullion India International Depository
After assuming regulatory to be traded in the form of a Bullion IFSC Ltd. (IIDI) and functions as a
authority in October 2020, IFSCA Depository Receipt (BDR). BDRs depository for IIBX as well as the
has endeavoured to ensure serve to ensure the authenticity stock exchanges in IFSC. The BDRs
an internationally oriented and and verified the existence of the are treated as a security, and IIDIL
benchmarked regulatory framework bullion managed by the depository functions as a depository for BDRs
to facilitate rapid growth across all through regulatory oversight of the that are created against the holding
business areas such as banking, vault managers and help achieve the of physical gold of a specified quality,
capital markets, insurance, global promotion of gold financialization. quantity, and identity parameters,

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