Digital gold sales hit after Sebi’s ban

Kolkata: Digital gold players see a 5 per cent drop in sales in FY22 as market regulator Securities Exchange Board of India (Sebi) banned buying digital gold from stockbrokers effective from September 10. Digital gold sales, which picked up since the pandemic broke out, is around Rs 4000 crore annually. Digital gold players are now looking at more tie-ups with jewellers, fintech firms and money remittance firms in tier 3 and tier 4 cities to expand their businesses.

National Stock Exchange (NSE) on August 26 directed its members, including stockbrokers, to discontinue the sale of digital gold on their platforms by September 10. The direction came after Sebi said certain members were providing a platform to their clients for buying and selling digital gold.

“Nearly 8-9 per cent of the digital gold business of the industry comes through stockbrokers. Post September 10, there will be some impact. The digital gold business is likely to come down by 5 per cent in FY22,” said Gaurav Mathur, managing director, SafeGold.

“As an industry player, I would welcome Sebi to come up with guidelines for regulating the digital gold trade. That will create more confidence among the customers,” added Mathur.

Many jewellers have announced their own launch of digital gold in the upcoming festive season as the product is gaining traction among millennials and young customers.

Tanishq, Caratlane, Candere have tied up with SafeGold to sell digital gold in this festive season. “We have tied up with 200 small jewellers, fintech firms, money remittance firms in tier 2 and tier 3 cities for our digital gold product and we will keep on adding them,” said Mathur.

There are three digital gold players in the market now – MMTC PAMP, Augmont and SafeGold.

“Sebi has not come up with any new ban, the Section 8(3) of SCRR, 1957, is there for many years, they have just reiterated the existing rules. They have clearly provided ways and means how third-party products could be sold to end customers. Sebi has given guidelines for all unregulated products, be it trading in International stocks, trading in art, real estate etc. There is the hype about Digi gold only because it is a growing product.” said Renisha K Chainani, head of research, Augmont Goldtech.

“All of our partners are already in compliance with Sebi guidelines, there is no need to panic, as there is no ban per se. Ban is only if you are not following the guidelines. Our customer base is a mix of clients, firstly; those who directly buy Digi gold from our platform. Secondly, the customers of our partnered broking and fintech players,” Chainani added.

“There would not be much impact on our sales volumes on yearly basis, but yes in the short term, there will be a slight dip in sales from broking customers,” the Augmont executive said.

Both SafeGold and Augmont said that customers should stay assured that their gold is safe in their vaults and they can get delivery whenever they want.