Mumbai, New Delhi (IANS): The Reserve Bank of India (RBI) on Friday issued a circular allowing the branches of Indian banks in GIFT-IFSC to act as a Trading Member or Trading and Clearing Member of International Bullion Exchange IFSC Ltd (IIBX).

The RBI said Indian banks authorised to import gold or silver will act as Special Category Client (SCC) of the International Bullion Exchange.

The RBI circular also stated that Trading Member/Trading and Clearing Member (TM/TCM) of IIBX shall execute trades only on behalf of clients (without proprietary trading).

As per the extant Foreign Trade Policy, the Reserve Bank grants annual import authorization to banks for import of gold and silver. Such banks, in addition to the consignment model in domestic tariff area, are hereby allowed to operate as a SCC on IIBX for import of gold or silver, the RBI said.

However, the SCC shall execute only buy trades on behalf of clients, the central bank said.

The SCCs will appoint one of the IFSC Banking Units (IBUs) to act as clearing member on their behalf.

All client trades placed on the exchange shall be against 110 per cent advance pay-in of funds (buy order) of the expected value of bullion (quantity & quality specification) intended to be purchased and securities (sell order) in the account of the bank, as is applicable, the RBI circular added.