LICENSE TO SELL GOLD

1. BSI REGISTRATION

How to apply for a hallmark licence for jewellery?

Jewellers who wish to apply for a hallmark license for selling gold jewellery must
first obtain hallmark registration from BIS. As per the BIS Hallmarking Scheme
guidelines, the regulatory body grants hallmarking registration to gold
jewellers/sellers for a specified location.
So, people who wish to sell hallmarked jewellery must obtain Hallmark Registration
from BIS for each of their sales outlets. Jewellers who have already received BIS
certification can have their gold/silver jewellery hallmarked at BIS Assaying and
Hallmarking Centres.
BIS Assaying and Hallmarking Centres are evaluation centres where the purity of gold
is examined.
Hallmark registration process
The hallmark registration process has been mentioned as follows:
 Ensure all documents required for registration have been collected in one
place.
 Fill up the online application for hallmarking of jewellery.
 Submit the application, documents and the prescribed fees.
 An inspector of BIS will conduct a minute inspection.
 Once a BIS inspector is fully satisfied with the result of their inspection, they
will provide a Hallmark Registration Certificate, which will reach the applicant
via email.
Hallmarking procedure in India involves three stages of testing. Details are as follows:
1. Homogeneity testing
Every item from a given sample is taken for homogeneity testing. These items are
checked minutely to evaluate whether they fulfil the regulatory standards set by BIS.
2. Purity testing
This is an important step and probably the most difficult one. Randomly, one of 50
similar items is chosen for purity testing. First, a preliminary test is performed on the
surface of each of the items. Then, smaller samples are collected from every item for
detailed examination. Finally, the tests are intensified to examine the gold's purity,
value and fineness.
3. Individual item marking
Marking every item individually is the final step. Laser and press are used to imprint
the hallmark on the gold depending on the result of the test. The jewellery may be
hand-marked as well if the case requires it.
Documents required for hallmark registration
Check the list of documents required for hallmark registration:
1. Proof of a company/firm establishment
 Registered partnership deed (if the applicant is a partnership firm)
 Registration certificate issued by ROC and MoA (Memorandum of Association)
 CA certificate (if the applicant is a proprietorship firm)
2. Address proof of company or firm
 GST registration certificate
 Income tax assessment order
 The sale or lease deed agreement
 Rent agreement with previous rent receipts
 Latest receipt of property tax
 Registration certificate issued by a state government
3. Proof of annual turnover
 Copy of GST returns of the previous financial year
 In case the firm is new, an undertaking should be collected from the firm with
an estimate of expected turnover and assurance to submit GSTR.
4. ID proof of the Signatory
 Aadhaar-based verification or e-signature
 Copy of PAN card, Aadhaar card, passport, driving license or photo ID card
issued by a Gazetted Officer on an official letterhead
5. Hallmark license fees
The Government of India has provided guidelines for setting Hallmark License Fees,
known as Registration Fees. It depends on the turnover in place population. Here's a
table depicting hallmark licensing fees in India:

Business turnover Application fee Registration fee

Up to Rs. 5 crore Rs. 2,000 Rs. 7,500
From Rs. 5 crore to Rs. 25 crore Rs. 2,000 Rs. 15,000
From Rs. 25 crore to Rs. 100 crore Rs. 2,000 Rs. 40,000
Above Rs. 100 crore Rs. 2,000 Rs. 80,000

Benefits of hallmarked gold

 Mandatory hallmarking of gold jewellery provides much-needed assurance to
buyers about their quality.
 It ensures higher exchange or resale value because quality standardisation
always leads to price parity. This increases the trading of gold articles.
 Buyers receive the necessary legal protection. Hallmarked gold/silver ensures
they don't get caught in fraud.
 By selling hallmarked jewellery, retailers lay the base of sustainable business
growth.
It is not possible to assess the purity of gold simply by looking at it. So, if you spot the
BIS hallmark on any gold article you purchase, you’ll know it's of high quality.
Assurance of high quality is something which consumers desire. Mandatory gold
hallmarking will not only develop customers’ trust, it will strengthen the industry as a
whole
 2. TRADE LICENSE

Trade license is a certificate/ document that permits a company to carry on the

business or trade activities in a particular municipal limit for which it is issued. In
Delhi, Trade License is issued by the Municipal Corporation of Delhi (MCD) to
traders and establishments to monitor and regulate the various trade activities at the
city level. In this article, we look at the purpose, procedure, and the documents
required for obtaining Delhi trade license.
Delhi Shops & Establishment Act, 1954
Regulations under the Shop and Establishment Act lays down the following rules
based on which the Delhi trade license is issued. Every establishment/shop must
compulsorily be registered under this Act within 30 days of commencement of work.
Shops and Establishments Act regulates the following aspects of doing business in
India:
 The working hours on a daily and weekly basis.
 Provisions for spread-over, rest interval, opening, and closing hours closed
days, national and religious holidays, overtime work.
 Regulation of employment norms for children, young persons, and women.
 Rules and regulations concerning paid leaves.
 Rules and conditions for employment and termination of service.
 Regulations concerning the maintenance of records and registers.
 Obligations of employers as well as employees.
 Precautions against fire, accidents, etc.
 Regulations concerning the display of notices.
 The responsibility of the employer and employee towards each other, the firm
and the society.
Businesses Requiring Trade License
All commercial establishment that falls under the following categories must obtain
trade license delhi:
 An establishment or administrative service in which persons employed or
mainly engaged in office work.
 A hotel, restaurant, boarding or eating house, a cafe or any other refreshment
house.
 A theatre, cinema or any other place of public amusement or entertainment.
Requirement to Obtain Trade License Delhi
The government has made it necessary for one to obtain trade license to ensure that
the person is not carrying out unethical business practices and is following the
relevant rules, safety measures and guidelines. A licensed business protects its owners
against certain types of liability. If damage or injury occurs the business actions or
doings, the personal finances would not be at stake in any settlement. The various
types of trade licenses offer different levels of protection.
List of Required Documents
The following information or documents/records are to be furnished at the time of
submitting the application form for obtaining Delhi trade license.
 Address Proof and Identity Proof – Individual.
 Affidavit
 Certificate of Incorporation, MOA and AOA of the company.
 Cancelled Cheque and Bank Statement.
 Certificate of Incorporation, MOA and AOA of the company.
 Legal Occupancy document proof of the establishment/unit or allotment letter
of the government agency.
 Documentary proof of establishment of trade.
 Lease Deed of the constitution.
 Documentary proof regarding the non-existence of unauthorised construction.
 NOC (No Objection Certificate) from the land-owning agency.
Documents required for the MCD trade license renewal online Delhi:
 Address Proof and Identity Proof
 Original License copy
 Old G-8 receipt
 Application for renewal of a license
Documents required for the issue of a duplicate trade license:
 First Information Report (FIR)
 Indemnity Bond in prescribed format.
Registration/ Processing Fee
The processing fees for the application will be charged Rs. 500/-, that includes the
handling charges of Rs. 50/- plus service charges. The Annual License Charges will
depend on the trade type. The trade license fee at the following rates to be paid is
tabulated below:

Category Area of the Establishment Fee/Charges

Category Conforming Area / Local (i) Rs. 200/ P.A. up to 10 sq. Meter.
A Commercial Area
(ii) Rs.500/-P.A between 10 Sq. Meter
to 20 Sq. Meter.
(iii) Rs. 50per Sq. Meter P.A above 20
Sq. Meter.

Category Non-Conforming Area / (i) Rs. 200/ P.A. up to 10 sq. Meter.

B Household
(ii) Rs. 500/-P.A between 10 Sq. Meter
to 20 Sq. Meter.
(iii) Rs. 50per Sq. Meter P.A above 20
Sq. Meter.

Application Procedure for MCD Trade License – Online Method

The applicants must follow the following steps to apply for the trade license delhi by
submitting the application form online.

Visit the MCD portal

Step 1: Applicants have to visit the official portal of MCD (Municipal Cooperation
of Delhi).

Step 2: Now you have to select your region among North DMC, South DMC, or East
DMC.
Apply for Trade/ Storage License
Step 3: Click on “Trade/ Storage License” tab visible on the home page.
Step 4: Then you have to click on the ‘Application for New License’ where you will
be directed to the new trade license delhi application page.

The application form for the Trade/ Storage License will be displayed as shown
below:
Fill in the right credentials
Step 5: Then, the applicant has to complete all the requested details such as New trade
license details, Applicant’s address details, other owner details, Type of license,
Business details, NOC from a fire department, Fee details, Property Tax details etc.
and click on the ‘Submit’ icon.

Upload Requested Documents

Step 6: Fill in the details further in the application form and upload the
requisite/mandatory documents and submit the application.

Step 7: After uploading all the requested documents (scanned documents), click on
the Submit icon.

Verification of Documents
Step 8: Once the application is submitted, verification of the documents will be done
by the ULB officials.

Generate Application Number

Step 9: After submitting the application form successfully, an automatic unique

application number will be generated.

Make Payment
Step 10: Once the application is scrutinised, the authorised official will calculate and
generate the fee-seeking requisite payment from the applicant for issuing the License.

Step 11: The applicant will be notified via SMS or email on the registered mobile
number and email address for making the requisite payment.
Delhi Trade License – Payment
Step 12: You have to fill all the following details to make the payment.
 UBL name
 Collection date
 Collection centre
 Payment mode
 Bank details

Step 13: Then, you have to fill out all the requested payment details.
Step 14: Then, click on the “Make Payment” icon to make the payment online. A
receipt will be generated as an acknowledgement slip for the amount made.
Once the payment is received, the competent authority shall verify and issue the Trade
license.
Application Procedure for Trade License – Offline Procedure
In Delhi, the applicants must follow the following steps to apply for the trade license
delhi by submitting the application form online.

Approach the Municipal Cooperation

Step 1: Firstly, the applicant has to visit the licensing department ranging from a
particular municipal limit.

Step 2: The applicant has to make a request with the executive for applying for a
MCD trade license.

Note: You can also download the application form of trade license from the official
web portal of MCD (Municipal Cooperation of Delhi)

Trade License application form is reproduced below for a quick reference.

Delhi-Trade-License.pdf (indiafilings.com)

Fill out the right credentials

Step 3: You have to fill the application form with appropriate details without any
errors. Provide the given following information in the application form.
 New trade license details
 Applicant’s address details
 Alternate owner details
 Type of license
Step 4: You have to submit an application form in the prescribed format to the
concerned operator along with all the supporting documents.

Attach Required Documents

Step 5: After applying, the applicant has to attach the specified documents along with
the application form. Then make the prescribed fees for the registration.
Step 6: Upon submission, the user will receive a transaction number to the registered
mobile number informing the details about the successful registration. The application
has to make a note on transaction ID to check the status of the application online.

Validity Period of Trade License

Trade License Certificate would be valid for three years from the date of issue. Hence,
it has to be renewed after three years by payment of license fee for such period.

Check Status

To know the status of your application, go to the official web portal website of
MCD. You have to select the Application Status link available on the site. Enter your
application number and click on the Submit button to view the current status of your
application.

Delhi Trade License – Application Status Check

MCD Trade License Renewal Online Delhi

Applicants can select the Renew License link from the official portal by clicking on
its ‘Renewal’ link and can apply for the MCD Trade license renewal online Delhi.
Once the payment for the renewal is made, your application process for trade license
will be completed.
Download Trade License
If the application form has been approved, you will receive a notification on your
registered mobile number. The trade license details will be updated in the portal of the
concerned state’s records. Log into the official portal and enter the Certificate number
along with the application number. Then, click on the “Submit” icon. Finally, you can
download the trade license certificate.

3. SHOP AND ESTABLISHMENT REGISTRATION

Shops are generally defined under the Act as the premises where the selling of
goods take place either by retail or wholesale or where services are rendered
to customers. It includes offices, godowns, storerooms, and warehouses used
in connection with the trade or business.
Commercial establishments are generally defined as commercial, banking,
trading, or insurance establishments or administrative services in which
persons are employed for office work. It includes a hotel, boarding or eating
house, restaurant, cafe, theatre, or other public entertainment or amusement
places. However, factories and industries are not covered by the Act and are
regulated by the Factories Act, of 1948 and the Industries (Development and
Regulation) Act of 1951.
All establishments and business, including the people working and maintaining
a business from home, must obtain a Shop and Establishment Registration
Certificate or Shop License (“Certificate”) under the Act.

PROCESS FOR OBTAINING SHOP AND ESTABLISHMENT REGISTRATION

The procedure for obtaining the Shop and Establishment Registration
Certificate differs from state to state. It can be obtained online or offline.
FOR ONLINE: - visit this site: -Online Registration (labourcis.nic.in)
The proprietor or owner must fill the application form for
the registration under the Shop and Establishment Act, upload the documents
and pay the prescribed fees. The prescribed fees differ from state to state.
Once the registration form is approved, the registration certificate will be
issued online to the proprietor or owner of the business.

FOR OFFLINE: - the registration application is to be filled and submitted to

the Chief Inspector of the concerned area along with the prescribed fees.
The Chief Inspector will issue the registration certificate to the owner or
proprietor after being satisfied with the correctness of the application.

DOCUMENT REQUIRED FOR SHOP AND ESTABLISHMENT

REGISTRATION: -

The documents required for obtaining the shop and establishment registration
certificate is-
 Shop or Business establishment address proof.
 ID proof of the proprietor.
 PAN Card of the proprietor.
 Details of the employees.
 Payment challan.
 Additional business licenses necessary for starting the business, if any.

VALIDITY OF LICENSE: -
Validity of Shop and Establishment Registration Certificate in Delhi. The validity
for Delhi shops and establishment act registration certificates lasts only 21
years. After this, you will have to renew your shop and establishment licence
within 30 days.

PROCEDURE FOR REGISTRATION: -

STEP NO. 1: - Documentation, (ALL the document mentioned above )

STEP NO. 2: - FORM A, on website itself (it will require information
like: - Name of establishment, category, nature of business)
STEP NO. 3: - Payment “Shop Establishment registration fees in
delhi @ 1800/- INR”

STEP NO. 4: - VERIFICATION

STEP NO. 5: - Issuance of certificate

4. Pan Card

5. Compliance with Anti-Money Laundering (AML)

Regulations:
Follow the guidelines issued by the Financial Intelligence
Unit of India (FIU-IND) to prevent money laundering
through gold transactions.
  BUSINESS MODEL OF MUTHOOT

Muthoot Finance Ltd. is renowned for its gold loan business, which
forms the core of its operations. Their gold loan business model:

1. Gold Loan Products

a. Types of Gold Loans:

- Short-Term Loans: Typically repaid within a few months to a
year. These are often used for urgent financial needs.
- Long-Term Loans: Can extend for longer periods, offering
more flexibility in repayment.

b. Loan Amount and LTV Ratio:

- Loan Amount: Customers can avail loans up to a certain
percentage of the gold’s market value.
- Loan-to-Value (LTV) Ratio: The LTV ratio is regulated by
the Reserve Bank of India (RBI) and usually ranges between
60% to 75% of the gold’s market value. Muthoot Finance
adjusts this ratio based on market conditions and regulatory
guidelines.

2. Loan Processing

a. Application:
- Customer Walk-in: Customers visit the nearest Muthoot
Finance branch with their gold jewelry.
- Online Application: Customers can also apply for gold loans
online through Muthoot Finance’s website or mobile app.

b. Gold Valuation:
- Appraisal: Gold is assessed based on its purity, weight, and
current market price. Muthoot Finance uses trained
professionals to ensure accurate valuation.
 - Documentation: KYC (Know Your Customer) documents are
collected, and the gold is verified and weighed.

c. Loan Disbursement:
- Instant Disbursement: Once the gold is verified and the loan
is approved, the amount is typically disbursed immediately or
within a few hours.
- Loan Agreement: A formal loan agreement is signed
outlining the terms, interest rates, repayment schedule, and
penalties for default.

3. Interest Rates and Repayment

a. Interest Rates:
- Interest Structure: Muthoot Finance charges interest on the
principal loan amount. Rates are competitive and lower
compared to unsecured loans due to the collateral involved.
- Fixed or Floating Rates: Interest rates may be fixed or
variable, depending on the loan agreement.

b. Repayment Options:
- EMI Payments: Customers can repay the loan through
equated monthly installments (EMIs) based on the agreed
schedule.
- Full Repayment: Alternatively, borrowers can repay the
entire loan amount along with interest in a lump sum.
- Penalties for Default: If borrowers fail to repay, penalties or
additional charges may apply.

4. Collateral Management

a. Safe Custody:
- Storage: Gold is securely stored in vaults to prevent theft or
damage. The storage facilities are equipped with advanced
security measures.
 - Insurance: Gold is insured against risks such as theft or
natural calamities.

b. Auction Process:
- Default Management: If a borrower defaults on repayment,
Muthoot Finance may initiate an auction process to recover the
outstanding loan amount.
- Auction Procedure: The pledged gold is auctioned through a
transparent process to recover the loan amount. Any excess
amount after clearing the loan and penalties is returned to the
borrower.

5. Risk Management

a. Valuation Risk:
Market Fluctuations: Gold prices are volatile, and Muthoot
Finance manages this risk through regular revaluation and
maintaining LTV ratios within regulated limits.

b. Credit Risk:
Borrower Assessment: While gold loans are secured, assessing
the creditworthiness of borrowers helps in minimizing the risk
of default.

c. Regulatory Compliance:
Adherence to Regulations: Muthoot Finance complies with
RBI regulations regarding gold loans, including LTV ratios,
transparency in operations, and disclosure requirements.

6. Customer Acquisition and Service

 a. Branch Network:

Extensive Reach: Muthoot Finance has a wide network of

branches across urban, semi-urban, and rural areas, ensuring
accessibility for a diverse customer base.

b. Digital Channels:
- Online Services: The company offers online application,
tracking, and repayment options, enhancing customer
convenience.
-Customer Service: Dedicated customer support teams assist
with queries, complaints, and loan-related services.

7. Revenue Model

a. Interest Income:
- The primary revenue source is the interest earned on gold
loans, which constitutes a significant portion of Muthoot
Finance’s earnings.

b. Processing Fees and Charges:

- Fees for loan processing, documentation, and late payment
penalties also contribute to revenue.

c. Ancillary Services:
- Revenue from additional services such as insurance and
other financial products offered through subsidiaries or
partnerships.

8. Market Position and Strategy

a. Market Leadership:
 - Muthoot Finance is a leading player in the gold loan sector in
India, with a strong brand presence and substantial market share.

b. Expansion and Diversification:

- The company continuously explores opportunities to expand
its branch network, enhance digital services, and diversify its
product offerings to drive growth.