Mumbai: Government-owned Indian Bank is hoping to set the slot machine ringing with the gold coin.
In an attempt to boost business, the nearly 100-year old bank is stepping up retail sales of its recently launched gold coins, targeting a net income of Rs 100 million by the end of the fiscal year, an official of the bank said.
"With margins coming down in other banking products, we thought this would be a good business to start," Indian Bank's S K Bandyopadhyay, general manager for new business development and financial products, said in an interview on Thursday.
“Besides, gold coins being purely traded products there was no dangers of it turning into something like a non-performing asset,” Bandyopadhyay said.
Since its launch in March, the bank has sold over 20,000 pieces of 4 and 8 gram coins tailor-made by Switzerland's MKS Finance SA through some of its 1,400 branches.
Over-the-counter bullion sales in coins and bars is catching up in the Indian market with gold prices rising to 26-year highs.
Indian Bank is among the several banks that have entered this business, while others have strengthened their existing operations.
"Banks have realised that this is an easy product to sell," Bandyopadhyay said. "If you have a large network, its easy to get customers." World Gold Council's latest report shows investment demand has surged by 32 percent to 42 tonnes in the first quarter of the current year.
This was at the cost of jewellery sales, a traditional favourite, which fell by 38 percent to 103 tonnes. "With so much turmoil in stocks and the interest rates so low, sales of bullion is picking up," Bandyopadhyay said.
Coins are an attractive proposition for banks also because of better margins. Bandyopadhyay said gold coins had a high margin of over two percent against the less-than-one percent margin in several non-interest banking products and services such as currency remittance, bank guarantees or even wholesale bullion.
Indian Bank is planning to introduce more high-value coins - those in 20 and 50 gram weights - to target high networth individuals.
Indian Bank is planning an initial public float at the end of the year and may enter wholesale bullion sale, which most of its rivals got into first before diversifying into retail.
Comments
0 comment