The launch of Electronic Gold Receipts (EGRs) on the National Stock Exchange (NSE) has introduced a new avenue for investing in gold, raising the question of whether the product can compete with established options such as Gold Exchange-Traded Funds (ETFs) and Sovereign Gold Bonds (SGBs).

EGRs, which began trading on the NSE in May, are dematerialised securities representing ownership of physical gold stored in SEBI-regulated vaults. Like shares, they are held in investors' demat accounts and traded through stock exchanges.

While all three products offer exposure to gold prices, they differ significantly in terms of ownership, redemption, liquidity and costs.

Physical gold ownership

One of the biggest distinguishing features of EGRs is that they are backed by physical gold deposited in SEBI-approved vaults.

Investors who hold EGRs also have the option to convert them into physical gold under the prescribed framework.

Gold ETFs, on the other hand, provide exposure to gold prices through mutual fund units backed by bullion, but investors do not directly own or take delivery of the underlying metal.

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Sovereign Gold Bonds, issued by the government, are financial instruments linked to gold prices. Investors receive returns linked to the movement in gold prices, but there is no provision for physical redemption.

Liquidity and trading

EGRs are traded on stock exchanges through registered brokers and settle in demat form, much like equities.

Gold ETFs also trade on exchanges and currently enjoy higher liquidity because they have been available to investors for several years.

SGBs are listed on exchanges, but trading volumes are often lower, and investors may face liquidity constraints if they want to exit before maturity.

Costs and returns

EGRs may involve brokerage and vault-related charges, although they do not carry fund management expenses.

Gold ETFs charge expense ratios in addition to brokerage costs, which can marginally affect returns over time.

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SGBs stand out by offering a fixed annual interest rate of 2.5% on the issue price, in addition to gains linked to gold prices. They also do not involve storage costs.

However, fresh issuances of Sovereign Gold Bonds have been suspended, limiting availability for new investors.

Accessibility for retail investors

The EGR framework has been designed to cater to both retail and institutional participants. Products are available in denominations ranging from 1 kilogram to as little as 100 milligrams.

Currently, vaulting and collection centres are operational in Ahmedabad, Mumbai, Delhi, Kolkata, Chennai and Bengaluru, with plans to expand the network to nearly 120 centres across the country.

According to the NSE, the framework aims to create a transparent and efficient bullion market and eventually help India emerge as a global price setter in gold.

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Which product suits which investor?

Gold ETFs are often preferred by investors seeking convenience and liquidity without dealing with physical delivery.

SGBs have traditionally appealed to long-term investors because of the additional 2.5% interest and tax benefits available on redemption at maturity.

EGRs, meanwhile, occupy a middle ground. They combine exchange-traded liquidity with the ability to convert holdings into physical gold, making them unique among paper gold products.

As the EGR ecosystem develops and trading volumes improve, the new product could emerge as a viable alternative for investors seeking the benefits of both physical gold ownership and exchange-traded convenience.

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Published on: Jun 15, 2026 7:25 AM IST