The Hindu Business Line : Banks see good biz in retail sale of gold coins

Banks are also considering extending loans against these coins and offering buyback facilities. Customers need the assurance of quality and the backing of a reputed brand.

Though most of them buy coins for gifting, banks also feel it could become an alternative mode of saving, given the volatility in the equity market and the low returns on bank deposits.

IndusInd Bank is the latest to offer coins of 5 gm, 10 gm and 50 gm. The larger 50-g size is for the high networth individual, said Mr Moses Harding, Executive Vice-President, IndusInd Bank.

"Gold is a low-risk product. As customers can buy in small lots, it is a good investment. The 50-g coin has become our trump card. We see good demand for it," he said.

Another advantage of gold is that it is accepted by all segments of consumers as a good investment, Mr Harding pointed out. "As and when prices move up, these coins can be encashed or converted into loans."

Even ICICI Bank, which was the first to offer retail gold coins, is considering offering buyback, said Mr Anup Bagchi, General Manager, ICICI Bank. "We may offer buyback of the coins to increase the product's liquidity and thereby sale."

Earlier, the bank had coins of 5-g and 8-g. This year, it also introduced 50-g coins.

HDFC Bank had added retail gold coins to its product suite a couple of months ago. Ms Chitra Pandya, Head, Liabilities Product Management, HDFC Bank, said that the advantage for the customer is the comfort that the coin is tradable without losing value. "As the coin is certified, customers do not mind paying a small premium."

Currently, HDFC Bank offers only 5-g coins. "We will pass on the advantage of buyback to the customers when we expand our distribution and offer the coin in varying weights," she said.

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