Mumbai: Gold demand in India, the world’s biggest consumer, may climb by as much as 10% a year as rising incomes in Asia’s third biggest economy spur jewellery purchases, State Bank of India (SBI) chairman O.P. Bhat said.
The country’s economy has grown an average 8.6% since 2003, the fastest pace since independence. India, which imported 715 tonnes last year, accounted for 27% of gold demand in 2006.
SBI plans to allow temples and other depositors to exchange their gold for interest-bearing bonds, Bhat said. Households in India have about 15,000 tonnes of gold, worth more than $200 billion (Rs7.86 trillion) locked away in family vaults, according to consultant McKinsey & Co.
“The temples and trusts can deposit gold with us. We will give them incentives and gold can be recycled,” Bhat said at an industry conference organized by the London Bullion Market Association in Mumbai on Monday. He didn’t provide further details.
SBI also plans to sell securities backed by gold to tap rising demand among individual investors to trade precious metals and other commodities, Bhat said.
The exchange-traded fund will be launched early next year by SBI Funds Management Pvt. Ltd, a group company, Bhat added.
Investors can trade gold through exchange-traded funds without having to take delivery of the preciousmetal. Bloomberg