All you need to know about Electronic Gold Receipts EGRs | CA Rachana Ranade

[00:00:00] Hey folks CA Rachana Ranade here and I welcome you all to a very brand new concept. Why am I saying it's a brand new concept? Because this is a concept, this is about a security which was launched on 4th of May 2026. It's as new as that. But what is the name? The name is EGR or Electronic Gold Receipts. Now what is it all about? By the way National Stock Exchange has launched this EGR but the whole thought process put it into simple words is nothing but EGR is nothing but a physical gold.

[00:00:30] which is converted into a DMAT format. Just to simplify this for you, back in those days like we had shares in physical format. Exactly. I had gone to NSE and that's where I actually found this SBI's physical share certificate. Now if someone were to buy a shares, someone were to buy shares of SBI would they get such physical share certificates? Answer is no. They would get it in the DMAT format right. Similarly now you can imagine instead of buying physical gold what if I can get that gold in the DMAT format.

[00:01:00] Exactly. That is what the EGR concept is all about. If I were to put it in a single line, EGRs are exchange traded securities that represent ownership of physical gold stored in SBI approved vaults. Just to give you some 2-3 important pointers. Just to give you some 2-3 important pointers from this, this is an exchange traded security. See just because it is going to come in your DMAT account doesn't mean it can automatically be traded.

[00:01:23] But they have made this provision. They have added this feature. Once it is in your DMAT account, you can actually trade it. Like you can trade stocks, you can also trade these EGRs. But if you are like, where is the physical gold? It is an EGR agreed. But is there an underlying asset? Underlying asset is physical gold and that is stored in SBI approved vaults. By now I am sure like, we have understood some bits and pieces. It is like a puzzle but we do not find a complete picture of that and that is exactly what we are going to understand in the next section of the video.

[00:01:53] Now let us understand the concept of EGR with the help of a very simple example. I am sure everyone will agree with me that a lot of temples in India have loads of gold. Okay. Now if it is gold in the form of jewelry, of course that will be required in the temple itself. But if I am talking about gold coins, gold biscuits or maybe water as we call in Marathi or gold rings basically, they need not be kept in the temple. In fact, I have seen people put gold coins or water inside the donation box. So where does this gold go actually?

[00:02:23] Many times what the temple authorities do is that they keep it in bank lockers. Okay. Now instead of putting it in the bank locker, what if they were to put it in a SBI accredited vault? Now what is that? Let's take a simple example for this. Like I told you, temples have a lot of gold. What can they do is they can put this gold in the SBI accredited vault. What do we mean by accredited? Approved. Okay.

[00:02:46] It is put in, let's say it is one kg of gold. Now what happens is that with this one kg of gold as an underlying asset, one EGR will be created, a gold receipt. But how is it? Is it a physical gold receipt? No, it's an EGR. It's an electronic gold receipt that will be created and that represents that yes, this is an EGR of one kg of gold. Simple to clear. Okay. Now you may be like, okay, is the use case only for temples? No, it can be for people like you and me as well.

[00:03:14] I don't have one kg of gold, but assume that I have 10 or 20 grams of gold. What can I do? Same old process. I have the physical gold, 10 or 20 grams, whatever. I'll put it in the SBI accredited vault. And then what happens is that let's say it's a 20 gram gold. I'll get EGRs worth 20 grams. Okay. Now question is that where will these EGRs be stored? They will be stored in the DMAT. Okay. If I'm talking about the temple, it will be in the temples DMAT account. If it is about me, it will be in my DMAT account. Okay.

[00:03:41] Ultimately, my DMAT is linked with whom? With the depositories. It could be either CDSL or it could be either NSDL. Okay. Now once it is in my DMAT account, let's say after five or six years, I feel that gold has given a nice rally and I want to sell off those EGRs. Would that be possible? Yes. How do I sell that on the stock exchange? And that is where exchanges like BAC and NSC will also come into this whole framework because they will facilitate the trade of EGRs.

[00:04:08] Is this simple? Yes. So let me tell you about the EGR ecosystem one more time as a quick revision. First, as I told you, there will be investors who must have gold. As an example, we took investors like you and me or temples examples that we took. Second, we said we need vaults, vault managers. They are approved by SEBI. Correct. Third, we said that we will need NSDN or CDSL who will be the ultimate depositories. Then we will have very important BAC or NSC, which will be exchanges through which I can actually even buy or sell those EGRs.

[00:04:38] And ultimately, there should be an institute who keeps an eye on all these people that they are not cheating. They are not doing any kind of malicious activity and that will be nothing but SEBI. I hope you have understood this. More pointers on EGR in the next section of the video. Now, let's go into a little bit more details of converting your physical gold into EGRs because I'm sure in the previous section, once you heard about it, you might be like, if I were to really take it to the EGR format, how to do that?

[00:05:03] So for that, I went to SEBI's website and I found only three SEBI accredited or registered vault managers. One is Brinks India, one is Malka Amit JK Logistics and one is SQL Logistics. Out of these three, two are from Mumbai, one is from Ahmedabad. So what I visualize, very important disclaimer, I have not tried it by myself. I have not tried converting my physical gold into EGR. But what I read over the net when I read about the different publications, different PDFs, which were even on the SEBI's website, on NSC website,

[00:05:32] I just could understand that what you would be required to do if you were to convert your physical gold into EGR, you would ideally contact these vault managers. Okay, once you go there, what these vault managers will do, they will check the quantity. Quantity is basically how much, what is the weight of your gold? 10 gram, 100 gram, 1 kg, whatever. Okay, and second thing they'll check is the quality. Is it 995 purity, 999 purity, whatever. So once the weight is checked, purity is checked, they will ensure that, okay, these are the details

[00:06:01] and based on their details, an EGR will be ultimately credited to your demand account. Simple to hear, yes. Now, if you were to withdraw these EGRs or sell these EGRs or sell is not the right word. Convert is the right word. In fact, if you were to convert these EGRs back into physical gold, then what is the procedure? Basically, here you put a request of withdrawing physical gold with the depository. Depository again, either NSDL or CDSL. Now, this request will be valid typically for three days. Okay.

[00:06:29] Now, once depository receives the request, they will forward this request to the vault manager. Okay. And vault manager will be responsible to transport that physical gold from their office to your residence or wherever you wanted to. Okay. But the question is that now we'll be like, what if I don't get the right quantity? What if I don't get the right weight? What if I don't get the right quality? The purity is missing, then what? So, you can obviously request for checking of that gold before it leaves the premises of the vault manager. Okay.

[00:06:58] Of course, testing will be done. They will give you a certificate that, okay, we have tested it. This is the weight and this is the quality, purity, whatever. And the charges related to the purity testing will, of course, have to be borne by you. Okay. So, purity testing charges, we are going to bear. Transportation charges, we are going to bear. Any other related charges like GST because now you'll be buying physical gold. That also now you'll have to bear. Okay. But I hope this entire process of converting physical gold into EGR and EGR back into physical gold is absolutely clear.

[00:07:26] Now, let's understand that how can you actually buy EGRs through NSC or BSC as an exchange, but you'll have to route it through a broker, right? But as of now, none of the brokers, neither Zeroda nor Upstox, nor any other broker basically has the permission as of now to sell or facilitate these EGRs transactions. But is it in process? This answer is obviously yes. As I mentioned last week only I'd been to NSE and we got to know that yes, EGRs will now be even available through multiple brokers. Okay.

[00:07:55] So, this is an update. Second thing, like you can buy or sell shares from Monday to Friday, anywhere between 9.15 to 3.30. In case of EGRs, it will be Monday to Friday agreed, but from 9.00 a.m. to 11.30 p.m. or even 11.55 p.m. Okay. So, of course, it will have a larger time frame for trading. One more thing is that they'll be settled on T plus 1 settlement basis. So, simple example, if you buy an EGR today, it will be credited to your DMAT account on the next day. Okay.

[00:08:23] Now, what are the different available denominations? Like you can buy one share, two shares, three shares. What are the available denominations here? It is 100 milligrams, 1 gram, 10 gram, 100 grams and 1 kg. These are the five available denominations and a lot of people are demanding for even 1 gram, sorry, 1 milligram and 10 milligrams. So, they are trying to ensure that the ticket size is very less. If the ticket size is less, the volumes can really explode, right? Finally, we must understand that there are certain charges involved here as well.

[00:08:52] Like we had purity testing charges, transportation charges in case of EGRs to physical gold. If you were to hold EGRs and sell it in the electronic format itself, what are the charges? Of course, brokerage will be charged. Like while buying and selling stocks, brokerage is charged. Same will be the example for EGR. Second, depository charges. Like you pay your depository charges for holding stocks. Same will be the case for EGRs as well. And number three, storage charges are also payable to the vault manager. So, if you were to put that gold in a bank locker, you would pay rent, right?

[00:09:21] So, similarly, you will have to pay storage charges to a vault manager. I hope all these charges are clear in the next and the final section. We'll talk about EGRs or gold ETFs or SGB or digital gold, which could be a better choice. Now, let's go by the method of elimination and understand which could be a better choice for people like you and me. I'm going to compare EGR, gold ETF, SGBs and digital gold. First and foremost thing that comes to my mind, is it regulated? Is EGR regulated? Is gold ETF regulated? Yes, both are regulated by SEBI.

[00:09:50] First thing, SGBs are regulated by RBI. Fair enough. But digital gold is not regulated. Okay. Second thing, what can be accepted as a collateral? Be it EGR or gold ETF or SGBs or all can be used as collateral. But if I'm talking about digital gold, that can't be used as a collateral. So, based on first two points, I would want to eliminate digital gold. Okay. Now, we are left with three. EGR, gold ETF and SGBs. Now, let's understand about charges involved. If I'm talking about storage charges, EGR will, I mean, if you're holding EGRs, you

[00:10:20] will have to incur storage charges and all we discussed about that, right? But it will be on a lower side, lower charges for EGR. If I'm talking about gold ETFs, here we have an expense ratio and which is typically higher as compared to EGRs. If I'm talking about SGBs, again, it is lower. Okay. So, EGRs and SGBs win in the charges pointer as compared to gold ETFs. And if I want to talk about taxation, when will these asset classes be treated as LTCG?

[00:10:46] EGRs and SGBs are treated as long-term asset and any gain will attract LTCG after 12 months of holding them. But if I'm talking about gold ETF, it will be treated as a long-term asset after 36 months, okay, or three years. So, of course, for taxation perspective also, EGR and SGB holding period is less. So, they win in this front as well. So, here now I would want to eliminate gold ETFs as well.

[00:11:13] Now, finally, EGR versus SGB, which could be better? Honestly, the original case where when the SGBs were issued for the very first time and they were tax-free, I think hands down SGB would have won no second thoughts on that. But now they also attract taxation. Now, the question could be about fixed interest. Does SGB have fixed interest? Yes, 2.5% coupon. But for EGRs, you are not going to get any fixed interest. So, in this case, SGB wins.

[00:11:37] But if you want to hold gold in the electronic format for a long period of time, more than 8 years, more than 10 years, more than 15 years, SGB, sure, this is not possible. Why? Because SGB has a fixed maturity, fixed maturity of 8 years maximum. So, it will automatically mature after 8 years. What about 10 years, 15 years? In that case, you will have to have EGRs. Plus one more pointer. If you want to convert that into physical gold, again, SGBs can't be converted into physical gold, but EGRs can be converted into physical gold.

[00:12:06] So, here, instead of giving one winner for EGR versus SGB, I may say that depending on your needs and wants, you may decide which one to go ahead with. I hope you have enjoyed this. By the way, I have done a separate video on SGBs as well. You can also check this video for SGBs. If you did like the video, don't forget to smash the like button. Don't forget to share this video with your friends. I'll see you in the next one. Until then, take care. Jai and bye-bye.