Financial Daily from THE HINDU group of publications
Monday, May 08, 2006
Financial Daily from THE HINDU group of publications Monday, May 08, 2006 |
|
|
|
|
|
|
|
Home Page
-
Investments Money & Banking - Trends Variety - Events Agri-Biz & Commodities - Gold & Silver Akshaya Tritiya spells gold rush for banks Archana Venkat
Cost for retail buyers Jewellers say they will pay lower price when coins are sold back. Banks cannot buy back the coins, it's just an investment option.
Chennai , May 7 For banks that sell gold coins, it is yet another business opportunity. And days like Akshaya Tritiya, considered auspicious for buying gold, a chance to advertise their business. Buyers are assured of the quality and there is no bargaining on price. However, some jewellers in the city see banks getting into this business as one that will wean away some of their corporate customers. Mr Ravi Kumar, Marketing Manager, Khazana Jewellery, said: "Banks have a larger and more organised marketing and distribution network than any jeweller." Though jewellers have their loyal customers, in the future corporate customers investing in gold coins may prefer buying them from banks, he added. IOB sold 25 kg of gold coins on Akshaya Tritiya - which fell on a Sunday (April 30) this year - and is positive that it will see perennial demand for gold. "Our 20 g and 50 g denominations have sold better than the 4 g and 8 g ones. These are serious investors we are talking about," said Mr V. Krishnaswamy, General Manager. ICICI Bank retailed gold at nearly 600 of its 650 branches. Bank officials said that business was brisk in the South. Four banks retailed gold coins this Akshaya Tritiya and many others are likely to follow suit. Sources said that a large PSU bank will soon enter gold retailing. Banks seem to be relying on customer confidence and the belief that anything a bank certifies will be authentic. The coins retailed by banks are also available with jewellers. These are Swiss Assay Certified 99.99 per cent pure gold (999 gold) that banks sell at 5-10 per cent above the prevailing gold rates. Customs duty is cited as the reason for the price difference. Jewellers too have to pay this duty, but prefer not to pass it on to their customers. Banks do not have a licence to buy back gold coins. This may pose a problem for the public as most jewellers still offer the conversion rate of 916 gold (99.95 per cent pure) for 999 gold. This is a lower margin and will result in a loss over large volumes for the consumers who have bought coins from banks and want to sell or get them converted into jewellery "Selling coins is a losing proposition for the customer as jewellers will give lower price for it. We have to add metal to make 999 gold fit for crafting into jewellery," said Mr Suresh Bapalal Mehta of Bapalal & Co, Jewellers. The retail business may not entail fabulous returns but the banks are not complaining. "The sale from coins will contribute about 1-2 per cent of our revenue," said Mr Krishnaswamy, adding that margins depended largely on the market value of gold and were not predictable. Both banks and jewellers saw reduced buying in gold coins this Akshaya Tritiya compared to last year - blame it on the high prices of gold. They were not, however, willing to put a figure on how much gold was sold this year compared to last year.
More Stories on : Investments | Trends | Events | Gold & Silver
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2006, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|