HDFC Bank will sell silver bars during a May festival in India for precious metals purchases, the first such sale by a bank, as demand picks up, a top executive of the bank said today.
The move, to sell silver bars weighing 50 grammes each, indicates that domestic consumers in India, the world's largest buyers of gold, are willing to add silver to their investment portfolio for diversification.
"We were looking at silver for a long time. When we were ready a year back, it was a time when the market wasn't looking good. This year demand seems to be pretty good," Seshan Ramakrishnan, head of the bank's retail liabilities and product group, told Reuters from Mumbai.
India's gold market saw its worst year in more than a decade in 2009 as the annual monsoon failed, bringing down farm output and curtailing consumer spending. Figures from the World Gold Council (WGC) show India's demand was at 480 tonnes in 2009, down 33% from a year ago.
"In the last six months, the demand in the market has been much better. Sentiment are a lot better this year, the stock market is improving, and the economy is looking a lot better," Ramakrishnan said.
Ramakrishnan said he was aiming to sell 100 to 150 kilos of 50 gramme Swiss PAMP silver bars on Akshaya Tritiya on May 16, when Hindus believe buying precious metals will give them lasting prosperity.
"It is a little bit like shooting in the dark as we have no experience in selling silver," he said. But "silver is another investment opportunity in the market."
Sales on Akshaya Tritiya are generally taken as an indication on how the full year could be as it gives precious-metal sellers an insight into the consumers' buying behaviour.
The private-sector bank, a large seller of gold, expects a 30% rise in its gold coin sales during the Akshaya Tritiya festival from 440kg last year, Ramakrishnan said.
A pent-up demand from 2009 resurfacing amid stable prices has made the climate favourable for buying gold this year.
Ramakrishnan said Indian consumers were expected to ask for gold bars of larger denominations as many Indians are now choosing to buy bullion they can convert to jewellery at a later date.