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CS Professional · IFSCA - Regulations, Listing and Compliances · India International Bullion Exchange (IIBX)

Mehta Bullion, a trading member of IIBX, buys BDRs for a client who wants to hold the metal as a receipt rather than take physical delivery immediately. Who issues the BDR against the bullion deposited?

A Bullion Depository Receipt is issued by a depository in the IFSC against bullion actually deposited with a registered vault manager. Every receipt must be backed by physical metal, so neither the RBI, customs nor a clearing corporation issues it without underlying bullion.

  1. AThe Reserve Bank of India
  2. BThe depository in IFSC, on bullion received and held by a vault managerCorrect
  3. CThe customs authority at the port of import
  4. DThe clearing corporation on its own balance sheet without any bullion

Explanation

A BDR is issued by a depository in IFSC against bullion that has been deposited with and is held by an IFSCA-registered vault manager, so the receipt is always backed by metal. The RBI, customs or a clearing corporation issuing unbacked receipts is not the framework.

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