Bank of India (BoI) is all set to enter the bullion business. In the initial stage the bank will start with a gold volume of 10 tonnes a year which will go up in course of time.
R V Joshi, general manager, said that Bank of India already has got representation from international gold suppliers like Mitsui of Japan, MKS of Switzerland, Union Bank of Switzerland and an Australian company.
Joshi said Bank of India was in the gold business quite early in its existence which stopped in the fifties.
After the bullion business has been permitted it has got into the exercise to prepare a gold infrastructure for the bank.
He, however, felt that in the initial stages the bank may deal in gold with a small profit margin ranging between 0.50 per cent and 0.75 per cent.
Exuding confidence in this line of bank operation, Joshi said till last year the country saw a total import of 600 tonnes of gold which is bound to go up.
BoI will start with replenishment of imports in the bullion market. Already, the bank has set up branches at Mumbai and Ahmedabad for operations on bullion business.
BoI, which has lowered its prime lending rate to 13 per cent in the wake of the credit policy has also decided to issue a bond of Rs 500 crore to Rs 700 crore with maturity period of 5-7 years. The bonds will be privately placed after the RBI approval for the scheme is obtained. Non-fund based income with a stress on fee earning has become the hallmark of the bank at present since interest earning through fine tuning of the band of interest and lending rates has become a tough task. The bank has been found to have earned as much as 48 per cent of its income from foreign operations and treasury operations.
Corporate sector will become the target area of the bank in the immediate future to bring back the bank on the correct equilibrium. It has set up eight corporate branches with one in Calcutta which will concentrate on the large and the middle companies as their prospective customers. These branches will deal with term loan requirements of Rs 5 crore and above.
In the past six months, BoI has sanctioned credit worth in the range of Rs 400-500 crore of which only 30 per cent have been disbursed. At present, bank support for projects worth Rs 990 crore are under scrutiny of BoI.
