Commodity Online
MUMBAI: The booming gold market in India that imports and consumes the largest quantity of the yellow metal in the world is attracting global players. Leading global banks are now lining up to trade gold in India.
Scotiabank, Canada’s second-largest bank, has chalked out major plans to launch trading and hedging in gold and other precious metals like diamonds, platinum and palladium in India.
A senior official in India’s Finance Ministry told Commodity Online: “We have received a proposal from Scotiabank to start wholesale trading and hedging in precious metals. We are processing the proposal.”
If Scotiabank is given permission, the bank may enter into a strategic tie up with either HDFC Bank or ICICI Bank to start trading in gold and other precious metals through India’s commodity exchanges. Scotiabank is in the process of setting up a wholly-owned subsidiary to trade in gold.
Already, Scotiabank has branches in major Indian cities like Mumbai, New Delhi, Bangalore and Coimbatore. The Canadian bank now plans to increase its branch network in India. “We are planning to foray into commodities trading in India. Our target is gold, as for people in India, gold is the best investment opportunity,” said an official with Scotiabank.
He said the bank has plans to participate in wholesale trading and hedging in precious metals, import and export of metals and deal in trading of precious metal commodity derivatives.
India permits a foreign investment up to 100% under the automatic route in the wholesale cash-and-carry trading and trading for exports.
Scotiabank is one of the North America’s leading financial institutions. It has a presence in 50 countries with over 2,000 branches. India, banking majors like HDFC and ICICI and India Post, the postal arm of the government of India, are aggressively promoting gold trading and gold coin sales.
Experts say plans by foreign players like banks to enter into gold trading in India bodes well for the massive bullion industry in the country. “India is the largest importer and consumer of gold in the world. So it makes sense for banking majors to cash in on the gold business in the country,” Harish Chawla, a bullion analyst in Mumbai, told Commodity Online.
