Gold coins still a major draw in India

Gold coins still a major draw in India

Public sector banks across the country that sold more than a tonne of gold last fiscal, are feeling the pinch of recent government curbs, though post offices have yet to catch up.

MUMBAI (MINEWEB)  - 

Even as the Indian government tries to curtail the sale of bullion in the country, with the hike in import duty and the curbs on nationalised banks and nominated agencies, the precious metal holds a particular fascination for Indians.

Be it gold coins that weigh just 2 grams or gold bars that weigh 50 grams, public sector banks across the country reportedly sold more than a tonne of gold last fiscal. The recent government curbs have affected sales though, with most bankers saying sales of gold coins have fallen to a trickle in the last seven weeks.

A very different scene is, however, visible at most post offices across the country, that are still registering healthy sales in gold coins.

Post offices across the country are making hay selling gold coins, with genuine competition between post offices. While in the 2011-12 fiscal year, post offices across Tamil Nadu topped the nation in the sale of gold coins, the next year, post offices in Bihar managed to sell around 41 kilos of gold coins to top the nation in the sale of the yellow metal.

Considering the boom in sale of gold coins, the postal department has decided to sell gold coins from seven more post offices in Bihar from this fiscal, besides the 45 existing ones.

Post offices across Tamil Nadu, Karnataka, Kerala and Maharashtra followed Bihar, generating good sales with their offering of gold coins.

At banks too, resounding sales of gold coins were reported on their books, before the curbs were initiated. For instance, at the Oriental Bank of Commerce, profit from the sale of gold coins jumped to $347,342 (Rs 20 million) from $316,781 (Rs 18 million), while earnings at the Punjab National Bank leaped to $1.3 million (Rs 79 million) from $1.2 million (Rs 71 million).

At the Bank of India, officials said turnover from gold sales soared to $593 million (Rs 34 billion) from the $472 million (Rs 27 billion) the bank managed to add to its income in the precious fiscal. Earnings at the bank increased to $3 million (Rs 203 million) from the $2 million (Rs 167 million) brought in last year.

An official at Bank of Baroda who spoke to Mineweb said, ``Indians can't help themselves. Every occasion is a day to buy gold and if the price is a wee bit high, most end up buying gold coins instead.''

Another official at Union Bank of India, who spoke on the condition of anonymity said, "Gold coins are a major sale item with most banks. They do not diminish in value on resale, since there are no deductions in making charges like that for gold jewellery. The government curbs has led to fewer people coming in for coins on a daily basis, though sales do tend to pick up on special days.''

Incidentally, Bank of Maharashtra which had started a gold coin linked one-year recurring deposit scheme, with minimum monthly instalment of Rs 600, has become centre of attention, the enabling factor was that when the deposit is redeemed, customers could avail themselves of a certain discount on the gold coin that they would purchase from the bank. The bank said the response has been overwhelming.

Other banks have taken to the idea and are to launch similar schemes, bankers said. Meanwhile, India Post, which continues to offer a special discount of 7% on the purchase of India Post gold coins has also decided to extend the scheme.

Source : http://www.mineweb.com