Kotak AMC's Managing Director Nilesh Shah has proposed creating a gold-backed stablecoin to address India's record gold import bill. According to reports from NDTV Profit, Shah suggested that startups should build a gold-backed stablecoin similar to the crypto instrument launched in El Salvador, which is backed by gold held in Switzerland. The key distinction lies in how price movements are handled - a gold-backed crypto passes gains or losses directly to investors, while a stablecoin structure could allow issuers to retain price appreciation, similar to how stablecoins backed by US Treasuries operate globally. Shah explained that "We can copy the same concept on gold" and noted that this approach could unlock India's trillions of rupees in idle gold holdings through innovative financial products.
India's gold import bill has reached concerning levels, with gold imports hitting a record $71.98 billion in FY26, representing a 24% year-on-year increase. As reported by Commerce Ministry data, while import volumes fell 4.76% to 721.03 tonnes from 757.09 tonnes the previous year, the rise was primarily driven by higher global prices rather than increased demand. Shah noted that Indians are the largest gold owners globally, with the country's reserves across gold, silver, diamonds and pearls amounting to roughly a quarter of GDP that remains locked up in an unproductive manner. The surging import bill comes against the backdrop of India sitting on vast, largely idle gold holdings that could be monetized through innovative financial products.
Shah renewed his call for Sebi to allow mutual funds to use gold options, which would enable fund houses to build principal-protected gold products. According to NDTV Profit, this structure would provide full upside if gold prices rise, with the option simply lapsing if prices fall, protecting capital. Shah also floated gold monetisation schemes and a sovereign gold bond-style instrument backed by physical gold sitting in RBI's vaults, arguing that privately held gold doesn't show up on the central bank's balance sheet despite foreign exchange already leaving the country to purchase it. The proposal aims to transform India from a 'Kasturi Mrig to Sone Ki Chidiya' - referencing the musk deer that unknowingly carries its own fragrance - representing a country sitting on wealth it isn't yet utilizing.
The proposal comes as Shah advocates for India to transform from a 'Kasturi Mrig to Sone Ki Chidiya' - referencing the musk deer that unknowingly carries its own fragrance. As reported by NDTV Profit, Shah's metaphor represents a country sitting on wealth it isn't yet utilizing. He emphasized that innovation should monetize India's gold holdings in a manner that allows the country to benefit from its substantial gold reserves, rather than continuing to import bullion at record levels. Shah's central idea centers on using India's idle gold to create new financial products instead of importing bullion, with the country's reserves across gold, silver, diamonds and pearls amounting to roughly a quarter of GDP that remains locked up in an unproductive manner.
