The Hindu Business Line : Kotak Mahindra expects to sell 300 kg of gold

Kotak Mahindra Bank began selling gold in September — by December it had sold 175 kg of the precious metal. Mr K.V.S. Manian, Group Head-Retail Liabilities and Branch Banking, Kotak Mahindra Bank, is confident that the bank's gold sales would cross the 300 kg mark before March. "We are targeting 750 kg for next year," Mr Manian told Business Line.

Asked about profits on this business, he said that gold retailing would add about Rs 1.5 crore to the bank's Q3 profits and would probably add another Rs 2.5 crore to the full year's profits. In September, the bank had launched gold products in two formats — 50 kg and 100 kg — and sold them as an asset class for investment.

On Thursday, the bank launched gold coins in 5 gm, 8 gm and 20 gm denominations.

How would the bank sell small quantities as an `asset class'? Answering this, Mr Manian said that customers would build an asset class through `systematic investment plans'— in other words, they would buy a gold coin or two each month.

Kotak Mahindra Bank is also going aggressive on branch expansion. It began the current year with 94 branches and expects to end the year with at least 110 branches.

It has applied to the RBI for 110 branch licences for next year. Mr Manian said each branch would cost anywhere between Rs 45 lakh and Rs 70 lakh, depending upon the location. The bank's branch-spread plan, then, could cost anywhere between Rs 50 crore and Rs 80 crore, next year. Mr Manian said that raising resources for capital projects was not an issue at all. He said a bank branch could take between 12 and 18 months to break even.

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