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India International Bullion Exchange (IIBX)- India’s First Bullion Exchange

IIBX (India’s First Bullion Exchange)- Relevance for UPSC Exam

  • GS Paper 2: Governance, Administration and Challenges- Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

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IIBX (India’s First Bullion Exchange) in News

  • Recently, Prime Minister Narendra Modi inaugurated India’s first bullion exchange- India International Bullion Exchange (IIBX), at Gujarat’s GIFT City.
    • GIFT City (Gujarat International Finance Tec-City), India’s maiden International Financial Services Centre (IFSC) located between Ahmedabad and Gandhinagar.

 

IIBX (India’s First Bullion Exchange)

  • Background: India International Bullion Exchange (IIBX) was first announced in the Union Budget 2020 for easing the Gold Import by Jewellers in India.
  • About: IIBX is a platform that not only enrols jewellers to trade on the exchange, but has also set up necessary infrastructure to store physical gold and silver.
    • Qualified jewellers will be permitted to import gold through the IIBX.
  • Notifying Authority: International Financial Services Centres Authority (IFSCA) is entrusted with notifying the eligible qualified jewellers in India for directly importing gold through IIBX.
  • Participation: Apart from qualified jewellers, non-resident Indians and institutions will also be able to participate on the exchange after registering with the IFSCA.
    • In the medium term, institutions such as Funds for Gold ETF are also expected to participate.
  • Products Available for Trading: Initially, Gold 1 kg 995 purity and gold 100 gm 999 purity with a T+0 settlement (100% upfront margin) are expected to trade at IIBX.
    • Later on, the products will be extended for T+2 (contracts with margin payments), where settlement of funds happens two business days after the order is executed.
    • A separate segment for UAE gold or gold with large bars (12.5 kg) may trade in future on the IIBX.
    • Silver products will also be made available in later phases.

 

 

Qualification Criteria under IIBX                                       

  • Qualification Criteria for Import: To become qualified jewellers, entities require a minimum net worth of Rs. 25 crore and 90% of the average annual turnover in the last three financial years through deals in goods categorised as precious metals.
  • Qualification Criteria for Trading: Jewellers will be able to transact on IIBX as trading members or as clients of a trading member.
    • For becoming a trading member, a qualified jeweller may establish a branch or a subsidiary in IFSC (international financial services centre) and apply to the IFSCA.
  • Limited Purpose Trading Membership: A qualified jeweller based in India and not having physical presence in the IFSC may apply for a limited-purpose trading membership
    • Under Limited Trading Membership, the entity can only trade on its own account and no client on-boarding shall be permitted.

 

International Financial Services Centre (IFSC): Explained

International Financial Services Centre (IFSC): Explained

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