The Hindu Business Line : Gold, silver imports by banks drop as prices rise

Some banks said that there has been a 20 per cent fall in import in terms of volume in the third quarter of the fiscal as against the same period last year.

Normally the third quarter, the festival and marriage season, is the peak consumption period for the precious metals.

Bankers said whenever there is a wide fluctuation in gold prices, jewellers prefer to wait and watch.

Therefore, though there still is demand for the yellow metal, off-take is low due to high price rise.

Banks import bullion on consignment basis for domestic jewellers and exporters. Normally, they do not stock the metal.

Union Bank of India, one of the banks that imports precious metals, has seen a fall of 20-25 per cent in bullion demand this year.

A senior official from the bank said, "Though it is a peak season, for the time being, people are not too keen on buying the yellow metal as they are waiting for some correction in the price," he said.

Last year, the bank imported 15,000 kg of bullion. This year so far, the bank has imported 9,000 kg, the official said.

Corporation Bank, another bank that imports bullion has also reported a 20 per cent fall. A senior official from the bank said, "There is demand for gold as our tradition demands buying of jewellery for various occasions, but due to rising price, people are buying less," he said. Last year, Corporation Bank imported bullion worth Rs 1,700 crore.

An official from HDFC Bank also agreed that the volume of bullion imported by the bank has gone down significantly.

However, some bankers are of the opinion that this lull is normal and demand will rise when prices fall even by two to three dollars per ounce.

Mr Moses Harding, Executive Vice-President, IndusInd Bank, said, "There is normally a bit of lull in the couple of months after Diwali. The rise in gold prices has not affected the demand much."

India is one of the highest consumers of retail gold in the form of jewellery.

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Gold, silver imports by banks drop as prices rise