Money & Banking

Banks cashing in on the ‘golden' week

Anjana Chandramouly Bangalore | Updated on March 12, 2018


The flavour this Akshaya Tritiya season seems to be larger denomination coins

Gold glitters the most on Akshaya Tritiya day, at least for some banks!

For instance, while Bank of India sees 35-40 per cent of the retail gold sales during Akshaya Tritiya, Indian Overseas Bank expects to sell at least 500 kg of gold during the week starting April 21.

“Sale of gold coins is a profit centre for us,” Mr M. Narendra, Chairman and Managing Director, Indian Overseas Bank, told Business Line. Last year, during this ‘golden' week, the bank sold 430 kg of gold coins.

Most banks are engaged in retail sale of gold coins in various denominations (2 gm, 4 gm, 5 gm, 8 gm and 10 gm). Some banks also sell 50-gm and 100-gm denominations. While most banks sell gold coins through designated branches, some like IOB have retail gold coin sales across its branch network.

Larger denomination

The flavour of the Akshaya Tritiya season is the larger denomination coins, and not the smaller ones. “Last year, there was not much demand for the 2-gm denomination, and so we have not indented for them this year. The break-even is also easier only with bigger denominations,” a Canara Bank official said.

Canara Bank sells gold coins through 50 designated branches across eight cities. The bank, which has sold 15 kg in the build-up to Akshaya Tritiya in March and April, hopes to sell at least 500 coins on Tuesday alone.

On April 21 and 22, the Bangalore circle of State Bank of India sold 6.5 kg of gold coins and expects 50 per cent additional sales in the next two days. Last year, it sold 5.5 kg of gold. “Rates are usually market-related and every year, we book profit on sale of gold coins,” said Mr Ashwini Mehra, Chief General Manager – Bangalore Circle, SBI.

Price fluctuation

However, retail gold coin sale is not a big profit centre for some banks. “We consider it as any third party sale like mutual funds or life insurance,” said Mr N. Seshadri, Executive Director, Bank of India. It is the fluctuating nature of the gold prices that makes retail gold sale quite risky, point out some bankers.

“As long as the prices are going up, it is profitable for us as we pay Customs duty on the cost,” said the Canara Bank official, adding that the bank might do a “re-think on the sale of gold coins in June/July this year”.


Published on April 23, 2012

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