Uniform gold pricing in Mumbai in a month

Diversity in the pricing of the bullion and jewellery items would soon come to an end, if the proposal of the apex bullion trade body the Bombay Bullion Association (BBA) is any indication.

In order to avoid under-costing sale of gold, around 15 leading bullion dealers in Mumbai are developing a price pooling mechanism under the aegis of a common formula - BBA. As per the plan, a common software is being developed which would allow all these leading dealers to feed the price every minute. The software would automatically average all these prices which would considered as the benchmark of the prevailing gold price in Mumbai.

"Currently, the dealer with high inventory sale their gold holding at a lower than the prevailing price quoted by banks. In contrast, those with lower inventory level always try to get premium.This creates a massive price difference upto Rs 200 per 10 grams at stockist level between two subsequent dealers and therefore, retailers in the same area creating thereby, an opaqueness in the entire bullion trade system. With the development of new price pooling mechanism, however, a uniformity would emerge among all these bullion dealers which may bring transparency at the level of retailers as well," said Mohit Kamboj, President, BBA.

Today, all dealers quote differently to their clients depending upon their purchase cost.

The uniform price, however, would not be binding on dealers. Against the the prevailing system of huge price difference between the quote to stockists and the actual selling price.

"The would bring transparency in to the system. We would soon meet to finalise the pattern. To start with, we would commence it in Mumbai in a month which can be expanded to the rest of the country depending upon our membership base," he added.
The benchmark price, however, would be at par with the prevailing rate announced by banks, Kamboj quipped.

Talking about the recent comment from the finance minister in which P Chidambaram appealed to the people not to buy bullion and gold jewellery, Kamboj said, "Banks have lent about Rs 300,000 crore to jewellers and bullion dealers. Will they declare this amount as NPA?"

Kamboj stressed the need to clean up the malpractices of the industry which malign even the reputation of genuine traders.