MUMBAI May 16 MMTC-PAMP has become the first
Indian gold refiner to join the London Bullion Market
Association's good delivery list, a global benchmark for
quality, which could help encourage Indians to sell hoarded
stocks of gold bars and jewellery.
The LBMA said on Friday it was satisfied with the ownership,
history, production capability and financial standing of
MMTC-PAMP and that the refiner had passed exhaustive testing
procedures, under which its gold bars were examined by
independent referees, and its own assaying capabilities were
MMTC-PAMP is a joint venture between Swiss refiner PAMP SA
and Indian state-owned trading company MMTC, the largest
importer of gold and silver in the Indian sub continent. It
joins 70 other refiners on the LBMA list.
"There was a lack of a credible refining facility, and now
we have addressed that vacuum," Rajesh Khosla, managing director
of MMTC-PAMP, told Reuters.
An estimated 20,000 tonnes of gold is held by Indian
households as a store of wealth rather than using bank accounts
and financial instruments.
The government wants them to monetize some of those holdings
to increase the amount of gold in circulation and help reduce
imports. MMTC-PAMP processes not only ore but also gold scrap
for resale in the domestic market.
"There were major proposals discussed last year to monetise
the above-ground stocks, and the major missing piece in this was
a lack of credible refining facility," Khosla said.
"Now that we've been approved, it should give banks and
regulators confidence to aggressively push for monetisation of
The government last year introduced a series of restrictions
to discourage gold imports after India's high current account
deficit (CAD) pushed the rupee to record low levels against the
dollar. Its gold import bill came second only to that for crude
Industry bodies including the All India Gems and Jewellery
Trade Federation, which groups more than 300,000 jewellers, have
been pushing to help mobilise household gold stocks but have
encountered obstacles including the lack of an LBMA-approved
India is the world's second-biggest consumer of gold after
China, but out of the total of 1,000 tonnes of consumption, only
around 150 tonnes are refined domestically.
MMTC-PAMP, which has 100 tonnes of installed capacity,
refined 40 tonnes of gold last year and plans to refine 80 to 85
tonnes this fiscal year to March 2015.
Haresh Soni, chairman of the All India Gems and Jewellery
Trade Federation, said the availability of LBMA-accredited
refining capacity would increase confidence in the purity of
gold bars refined domestically.
"The overall cost and premiums will come down and consumers
and the industry will benefit from this," he said.
Premiums on physical gold in India were at $110 an ounce
over London prices on Friday.
Meanwhile, the Reserve Bank of India has indicated that it
aimed for a slow and steady removal of restrictions as the
current account deficit comes under control.
(editing by Jane Baird)