Bank of India mulls selling silver bars

MUMBAI: The surge in silver prices has led to one more lender toying with the idea of selling the metal in the local market. Bank of India is expected to shortly join the ranks of two lenders — Scotiabank and HDFC Bank — that sell silver bars locally.

Bank of India’s bullion exchange branch in Zaveri Bazaar is trying to gauge the interest among 8-10 of its clients for buying silver bars from the branch, said a bank official. “We will take a final call on the outright sale of silver bars once we have ascertained the interest of our clients for the product,” he said. “Costing and details involving storage, etc, are being worked out and we should shortly arrive at a decision.” While HDFC Bank says it became the only bank to start a retail silver bar business in India last year, it is not clear at this stage whether BoI will sell silver bars to retail investors.

Silver, which moves in tandem with gold, rose by 71% to `47,500 a kilo last year against a 23% increase in the yellow metal to `20.79 lakh a kilo. The jump in gold following the global recession of 2008, which led to major governments debasing their currencies, has made silver a cheaper investment option. Apart from that, increased usage in electronics and photography applications has increased demand for silver. Even so, gold is quoting above `21 lakh while silver is available at `54,000.

At present, BoI sells gold bars outright and offers gold loans to jewellery manufacturers. Last year, BoI’s four bullion exchange branches — two in Mumbai and one each in Ahmedabad and Chennai — sold around 11,000 kilo of gold bars to its clients.