Banks in race for gold business

State Bank of India (SBI) has introduced certain novel ideas to sell gold in the domestic market by offering customer-choice facilities to outcompete its other counterparts who have entered the business recently.

SBI is the pioneer bank in the Indian market for handling gold/silver business. The bank has now thrown open screen-based trading facilityin the yellow metal to the domestic manufacture at its recently computerised overseas branch, Mumbai. “The branch has its own dealing room and state-of-art technology to handle international transactions and is fully equipped to meet the needs of the ever-growing demand for the yellow metal,” said an SBI official.

SBI has arranged a consignment stock at the branch which facilitates delivery of the metal on payment on the same day of fixing the rate. The services charge of the bank has also been graded on value-based transaction. The comstomers are now in a position to fix the best gold rate available and also take advantage of the fine/attractive exchange rate available at its overseas branch simultaneously.

“The public sector banks are desperately trying to grab the best clients, namely the biggest gold dealers in the country. We are being aggressive as we want to make a lot of money as fast as possible,” an official said.Corporation Bank, one of the new entrants in the business, is charging one percent on the turnover as its commission for imports at Ahmedabad. The rate varies from bank to bank and from place to place. In Ahmedabad and New Delhi banks can afford to charge a higher commission as there is zero tax on entry of gold. However, int Calcutta where there is multi-point taxation resulting in a higher landed cost for the buyer, the commission will be "adjusted", officials said.

Incentives are also available in the form of rebates. Some of the old clients and reputed gold dealers who place large orders with the banks are eligible for rebates which can vary up to four per cent.