Sovereign gold coin spread to expand

MMTC to focus on increasing the distribution, tying up with more banks and the post office, among others

Better distribution of officially minted coins, termed sovereign ones, are expected to lead the sale of gold coins in the year ahead.

The scheme in this regard, to make available for sale what are termed 'Indian Gold Coins', was started in November last year as part of the Centre's Gold Monetisation Scheme (GMS). Manufactured by the Security Printing and Minting Corporation of India, they're being sold via MMTC, the government-owned trading entity.

MMTC has since sold 185 kg of gold coins and bars, in denominations of one, two and five grammes, beside 10g and 20g. These are available at a premium of around nine per cent to the market price at Zaveri Bazaar here. As against the current Rs 30,025 per 10g of 0.999 purity (announced by India Bullion and Jewellers Association), sovereign gold coin of similar denomination is quoted at Rs 32,710 per 10g.

Till this scheme came along, gold coin markets were dominated by local jewellers, offering own brands with claims of quality guarantee with Bureau of Indian Standards certification.

“The biggest constraint for sovereign gold coin sales was limited distribution network. Along with its 26 owned outlets, MMTC distributed through around 200 outlets overall, compared with 300,000-400,000 jewellers. Yet, MMTC was able to sell so much. Since the policy constraints have, by and large, been resolved by the Reserve Bank of India, banks are warming up to ink pacts with MMTC to sell sovereign gold coins. We believe its distribution would be very widespread in the next one year and sovereign gold coin is likely to emerge as the single largest branded one in the medium term,” said Somasundaram P R, managing director in this country for the World Gold Council.

“The research echoes consumers’ preference for the Indian Gold Coin, as it is backed by the government and is a quality product. Apart from MMTC outlets, it is currently available at four banks – Indian Overseas Bank, Federal Bank, Vijaya Bank and YES Bank. In the near future, our focus is to strengthen distribution by signing up more banks and India Post, to ensure it’s available to consumers across the nation,” said Ved Prakash, chairman and managing director, MMTC.

MMTC is also looking to make these coins available at different tourist places, for visitors to buy and take back.

Trade sources say success of the sovereign coin scheme would also depend upon gold collection through GMS from households, where lie an estimated 22,000 tonnes.

India’s gold demand was estimated at 131 tonnes during the April–June quarter, of which investment demand (coins and bars) was a fourth.