SBI’s gold collections touch 2 tonnes

Under the scheme, India’s largest commercial bank aims to draw out privately held gold stocks and reduce the country’s dependence on imports. India’s gold holdings are estimated at 10,000 tonnes accumulated over generations, comprising mainly family heirlooms and jewellery forming part of dowry gifts. The country is also the world’s largest gold consumer and meets almost all its requirements from imports.

It officially imported 478.9 tonnes in the first three quarters of calendar 1999, down from 481.8 tonnes in the same period last year, the industry-funded World Gold Council said.

The SBI official said a major reason for the bank not being able to step up collections was the lack of supporting infrastructure, like storage facilities and assaying centres, which are crucial to assess the quality of the gold collected. "We are using assaying facilities of government mints as there is no other infrastructure in the country. It takes time to tie up with airlines to lift the gold to a central centre. There are other security issues," the SBI official said.

The bank is moving ahead on plans to set up its own joint venture assaying company — SBI Gold and Precious Metals Pvt Ltd — together with Credit Suisse First Boston and three state-run banks.

The assaying company is expected to start operations end-June, the official said. He added that SBI planned to step up its collections in the next two months by increasing the number of branches operating the scheme.

"So far we have been operating the scheme from 15 branches. We will increase it to 50 by April-end," he said.

The bank has set the target for collections at 100 tonnes in the first year of the scheme. "I think we should be able to do it. A bulk of our collections so far have come from individuals and households. We are yet to tap temples and religious institutions, which are the biggest hoards of gold," the official said.

He added the bank was yet to extend the scheme in a big way to the southern states of the country, which have the largest private stocks of gold.