New gold pol­icy likely to en­cour­age ‘bul­lion bank­ing’: WGC In­dia

The Hindu Business Line - - NEWS - KR SRIVATS

The World Gold Coun­cil (WGC) sees gold be­com­ing a strong ‘fi­nan­cial as­set’ in In­dia once the Cen­tre rolls out its pro­posed com­pre­hen­sive gold pol­icy this year, a top of­fi­cial said.

Ac­cord­ing to the new pol­icy, banks will be al­lowed to do ‘Bul­lion Bank­ing’ (take risk in bul­lion) and new in­fra­struc­ture such as spot ex­changes would be a re­al­ity, ush­er­ing in trans­parency and thereby ben­e­fit­ing con­sumers and small jewellers in par­tic­u­lar, PR So­ma­sun­daram, Man­ag­ing Di­rec­tor-In­dia, WGC, told Busi­nessLine here.

Bul­lion bank­ing will en­able con­sumers to do bul­lion-re­lated trans­ac­tions with banks with ease. Spot ex­change will solve for liq­uid­ity in the mar­ket.

“This up­com­ing gold pol­icy, which we ex­pect to get un­veiled by the govern­ment very soon, will have pos­i­tive im­pact on our ex­ports. It will not have any im­me­di­ate im­pact on de­mand, but will im­prove sen­ti­ment,” said So­ma­sun­daram.

It may be re­called that a draft pol­icy for pro­mo­tion of gold as a fi­nan­cial as­set has al­ready been cir­cu­lated to rel­e­vant Min­istries for com­ments, and a pro­posal to set up a gold ex­change is un­der con­sid­er­a­tion by the govern­ment.

“Our be­lief is that af­ter the NITI Aayog re­port, the work for new com­pre­hen­sive gold pol­icy is in the last lap. It should be a re­al­ity very soon,” So­ma­sun­daram said.

So­ma­sun­daram also high­lighted that the up­com­ing gold pol­icy is not just driven by In­dia’s needs. “We are look­ing at a pol­icy not just for In­dian mar­ket. We are look­ing at a pol­icy for an in­ter­na­tional gold mar­ket with 25 per cent of de­mand com­ing from In­dia,” he said.

De­mand out­look

Mean­while, the WGC has upped its gold con­sump­tion fore­cast for the In­dian mar­ket for cal­en­dar year 2019 to 750-850 tonnes from the 700-800 tonnes pro­jected ear­lier. This de­mand fore­cast is also higher than last year’s av­er­age de­mand of about 760.4 tonnes. In­dia’s gold de­mand has av­er­aged about 838 tonnes in the last decade.

“We see con­sump­tion will be slightly up at 750-850 tonnes this year than ear­lier an­tic­i­pated. This is be­cause GST is in a sense largely set­tled, mar­ket share of or­gan­ised play­ers are go­ing up, and the govern­ment has taken ini­tia­tives to im­prove econ­omy in ru­ral ar­eas, which will lead to higher sav­ings in gold — more money in hands of ru­ral peo­ple,” he said.

An­nual Gold de­mand gained 4 per cent in 2018, on high­est cen­tral bank buy­ing in 50 years. Gold de­mand had reached 4,345 tonnes, up from 4,160 tonnes in 2017 and in line with the five-year av­er­age of 4,347.5 tonnes. A multi-decade high in cen­tral bank buy­ing (651.5 tonnes) drove growth.

ZY PR SO­MA­SUN­DARAM Man­ag­ing Di­rec­tor-In­dia, WGC YZ

“This up­com­ing gold pol­icy, which we ex­pect to get un­veiled by the govern­ment very soon, will have a pos­i­tive im­pact on our ex­ports”

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