It’s gold for banks on Akshaya Tritiya

MUMBAI: With the festive season approaching again, banks have started promoting their gold retail business in a big way. Diwali is traditionally associated with gold buying. Another day which is considered auspicious for purchases of the yellow metal is Akshaya Tritiya, which falls on this Thursday.

So, while Kotak Mahindra Bank is pushing its Eternity Gold Bars, HDFC Bank is advertising its Mudra Gold Bars and also offering a 4.5-5% discount on 5g, 10g coins and 50g bars. Realising that Akshaya Tritiya has grown from a regional festival to a nation-wide event, ICICI Bank too is trying to popularise its Pure Gold brand.

Union Bank of India, which earlier was only into gold wholesale business, has also enrolled itself in the list of banks selling gold coins this month. The bank announced that it would be promoting gold sales during festivals such as Akshaya

Tritiya and Vishu. Indian Bank, which earlier sold gold in 4g to 50 g denominations under the banner of Swarna Mudra, would on Akshaya Tritiya add the 2 g coin to its offer basket.

Gold-retailing by banks, which took off in 2003, covers under its net selling of coins in dimensions between 2 and 500 grams and the 1 kg bar, which come with a counterfeit-proof ASSAY certificate.

The 150-tonne imported gold business in India, which translates into a Rs 15,000-crore market, gets a push in India during the festival period, which is usually associated with gold-buying.

The demand for the gold coins increases by 10 times during Akshaya Tritiya and even more during Diwali, says Srinivasa B, senior manager, precious metals, at Corporation Bank.

Gold jewellers in the city too agree to the spurt in demand that festivals bring in. “The purchases advance by 20-30% during Akshaya Tritiya and by at least 40-45% during Diwali,” says Chunnilal Jain of Gold Plaza.

Though almost all banks claim to have imported the gold coins from the PAMP refinery in Switzerland, the prices of each vary, especially those charged by the public sector banks.

On the gold coins sold, banks charge a premium for its profit margin and additional expenses incurred on transportation of the imported gold, storage facilities and employee charges.

Further, the bank only sells gold and does not buy it back. The investor would have to sell the coin carrying the counterfeit-proof ASSAY certificate to a jeweller, who would not consider the premium that the bank charged for the gold coin.