How to convert e-gold into physical gold

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  • November 2, 2021
How to convert e-gold into physical gold

Introduction

Investment in e-gold is equivalent to the investment in physical gold. These investments in e-gold are generally subscribed under the guidelines of NSEL (National Spot Exchange). While investing, the customer buys e-gold in Demat form which is then transferred into the beneficiary account of NSEL in the name of the individual. These beneficiary accounts are Demat accounts having single or joint holdings. To convert e-gold into physical gold, investors use these beneficiary accounts aka Demat accounts for e-gold trade.

How to convert e-gold into physical gold

There is a systematic procedure for converting e-gold into physical gold. The minimum quantity of e-gold that can be converted into physical gold is 1gram.

Here is a systematic guide on how to convert e-gold into physical gold

  1. DP – Depository Participant takes care of the e-gold. Before requesting NSEL to convert e-gold into physical gold, the investor will have to hand over the e-gold to the depository participant along with a delivery instruction slip (DIS). These documents are accessible for free on the NSEL website.
  2. SRF – SRF stands for Surrender Request Form. Any investor who wants to convert their e-gold into physical gold will have to submit an SRF to National Spot Exchange (NSEL) requesting the conversion of Demat units into physical gold. SRF also requires the investor to mention the denominations of physical gold to be delivered. However, e-gold converted into physical gold is available in the denominations of 8 grams, 10 grams, 100 grams, and 1000 grams.
  3. TRF – Once the depository participant submits an e-gold to the NSEL, an acknowledgment certificate with Transfer Request Form and delivery instruction slip duly signed by the depositary participant are submitted to NSEL. The investor then specifies the center for physical gold delivery.
  4. Nominal charges – Once Delivery Instruction Slip (DIS) and Surrender Request Form (SRF) is submitted, the NSEL in charge starts computing additional charges like packaging, delivery charges, VAT, etc. These charges are then added to the final amount and sent via E-mail address to the investor. The investor is required to issue a cheque in the name of ‘National Spot Exchange Ltd’. Investors can also issue a Demand Draft only if the amount exceeds Rs 50,000. The general charges are as follows –
Gold Quantity Amount
8 grams gold Rs 200
10 grams gold Rs 200
100 grams gold Rs 100
1000 grams gold No charges

VAT charges are normally charged when e-gold is converted into physical gold against Demat units. If transactions of e-gold are in the Demat form, investors are not required to pay VAT charges.

  1. Delivery of Physical goldPhysical gold kept in the vaults of NSEL is fully secured and insured. However, these vaults are available in specific locations of the country. Ahmedabad, Bangalore, Cochin, Chennai, Delhi, Hyderabad, Indore, Jaipur, Kolkata, Kanpur, and Mumbai are NSEL authorized centers. While submitting the forms, investors specify their center preference for physical gold delivery. The investors can collect the physical gold from the center after the 7th day but before the 15th day from the submission of the request. In case the investor is unable to collect the physical gold from the center, they are liable to pay storage charges as a penalty.

Procedure for physical delivery of e-gold

  1. DIS is submitted to the depository participant along with SRF.
  2. The depository participant credits the NSEL account with the e-gold mentioned in the form.
  3. The depositary participant then signs the TRF and handover the documents (DIS, SRF, and TRF) to the investor.
  4. The investor has to submit these documents to NSEL and specify the center of delivery.
  5. NSEL computes the invoice that includes all additional charges and taxes.
  6. The invoice and amount are directly mailed to the investor E-mail address mentioned in the documents.
  7. The investor is required to make payment according to NSEL guidelines.
  8. After the 7th day and before the 15th day, the investor can go to the specified center and collect the physical gold.
  9. The physical gold will be handed over to the investor after ID verification has been done by the NSEL authorities.

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