Industry body proposes bullion bank framework to mobilize domestic gold and reduce imports

Fri May 22 2026

The proposal also includes ETF integration and regulatory monitoring, while enabling passive on-the-move to support the jewellery sector.

India’s jewellery body has submitted a bullion bank framework, ALDGF and seeks to create a regulated bullion bank framework that would mobilize household and institutional gold, recycle domestic supplies into the economy and reduce pressure on imports. The proposal was discussed during a meeting between Union Commerce and Industry Minister Piyush Goyal and representatives of the ALDGF, according to people familiar with the discussions.

The industry body urged the Government to create a formal framework under which domestic gold held by households, institutions and investment vehicles could be transacted, mobilized and lent back into the jewellery ecosystem, sources said.

“The Minister has agreed to consider setting up a consultation committee to examine the proposed bullion bank framework,” sources said. The committee, if formed, is expected to include representatives from the Government, jewellery industry, bullion market, financial institutions and regulators.

ALDGF, the jewellery arm associated with Confederation of All India Traders, is likely to meet the Minister again within the next few days to further take the proposal forward.

The proposal states that around 25,000 tonnes of idle household wealth which includes gold held by pooled, unclassified, estate and trust. On the supply side would be households and institutional holders of gold, while jewellers, exporters, refiners and manufacturers would form the demand side.

The framework aims to monetize what the industry describes as idle stock of 25 lakh crore of held by households and institutions, thereby lowering demand for imports of the metal.

The proposal comes at a time when India is facing pressure on its currency and foreign exchange reserves amid crude oil and gold prices.

Earlier this month, Prime Minister Narendra Modi urged citizens to offer gold purchases for a year to reduce pressure on the rupee and the country’s import bill. Industry executives, however, said that any slowdown in gold demand could affect the livelihood of nearly 5.2 crore people dependent on India’s gold and jewellery ecosystem.

As part of the proposed framework, ALDGF suggested integrating gold exchange-traded funds with the bullion bank structure. According to the federation, Indian gold ETFs currently hold physical gold worth custodians, much of which remains idle in vaults. They also suggested ETF inflow often creates demand for imported gold, adding to import pressure, it said.

The federation proposed allowing ETFs to lend 20-25% of their physical gold holdings through the regulated bullion bank framework. Such lending should be collateralized, insured, audited and marked to market daily, while borrowers should maintain short and mid-correlated, the industry body said.

To oversee the framework, ALDGF has proposed the creation of an inter-ministerial task force involving the Finance, Commerce Ministry and Ministry of Consumer Affairs, along with market regulators and multiple departments.

Source: https://retailjewellerindia.com/