In a recent move aimed at streamlining the import process of gold and silver into India, the International Financial Services Centres Authority (IFSCA) issued a circular on April 19, 2024. The circular extends permission to Indian banks, authorized by the Reserve Bank of India (RBI), to act as Special Category Clients (SCC) of the India International Bullion Exchange IFSC Ltd (IIBX).
At the heart of this transformation lies the IIBX, a pioneering platform revolutionizing the import dynamics of gold and silver. Endorsed by a consortium comprising Indiaโs top five market infrastructure institutions, IIBX serves as a gateway for direct import transactions. Unlike traditional methods reliant on Nominated Agencies or Nominated Banks, it offers qualified entities, including bullion dealers and jewelry manufacturers, unparalleled access to international markets. Through transparent real-time pricing in US dollars, entities can place bids and execute import orders tailored to their specific needs.
The recent circular from IFSCA represents a strategic alignment with earlier directives from the Reserve Bank of India (RBI). Building upon RBIโs prior approval for Indian banks to engage in gold and silver import transactions, IFSCAโs directive extends this privilege to SCC banks. Under this arrangement, SCC banks are granted rights to place purchase orders on IIBX for the sole purpose of importing precious metals on behalf of their clients. However, the Circular provides that purchase orders will be placed in the name of the SCC Bank only and thatโs why Unique Client Code for placing these orders will of the SCC Bank. Notably, these banks are restricted from executing sale orders on the IIBX platform.
The recent Circular also requires SCC banks to utilize the services of an IFSC Banking Unit registered as a Bullion Clearing Member for clearing purchase transactions. Although the SCC Banks are not considered as Bullion Trading Members or intermediaries of the IIBX, however, these are mandated to adhere to all relevant norms delineated in the IFSCA (Bullion Exchange) Regulations, 2020, alongside the Operating Guidelines outlined by IFSCA on August 25, 2021. Furthermore, they must ensure compliance with additional regulatory requisites as prescribed by IFSCA and IIBX.
Readers are welcome to send their views to Regstreet Law Advisors at info@regstreetlaw.com