India's largest companies are making inroads into one of the country's most ancient businesses - the purchase of gold by the nation's hundreds of millions of women for weddings, festivals and savings.

Reliance [Get Quote] Money, part of an industrial group owned by billionaire businessman Anil Ambani, has linked up with post offices to offer gold savings passbooks to rural Indians, enabling them to purchase gold without taking physical possession until they need it.

"Indians for thousands of years have been buying gold jewellery as an investment or for ornamental reasons," said Keyur Shah, assistant director at the World Gold Council. The council, a gold mining industry body, helped set up the partnership between Reliance and India's postal service.

"Traditionally, they got all their gold only through jewellers, but now there are other outlets, such as banks and post offices."

India is the world's biggest consumer of gold, importing up to 800 tonnes each year, making its market one of the most important in determining the price of the metal.

Gold demand in India has fluctuated wildly in recent months in line with rising prices.

There were reports that the country became a net exporter in the first months of the year - an unprecedented situation.

But Mr Shah said he suspected gold demand in India would normalise ahead of the next festive season in the second half of the year.

In addition, gold prices have begun to fall following a rebound in appetite for riskier asset classes, such as stocks.

Gold futures for June delivery were down 1.9 per cent to $924.10 an ounce in morning trade yesterday on the New York Mercanitile Exchange's Comex division.

Sudip Bandyopadhyay, chief executive of Reliance Money, said the group was selling 3kg-4kg a day of its gold coins, or medallions.

Produced by Swiss company Valcambi and sold in sealed packets in denominations from 0.5 grams to 8 grams, the coins are available at 300 post offices, a number the company plans to more than triple by December.

"People have been visiting their neighbourhood jewellers and buying gold of suspect quality," said Mr Bandyopadhyay. "These are tamperproof."

The trade in gold coins was growing at a compound annual growth rate of about 15 per cent and now accounted for about 30 per cent of India's total consumption, Mr Shah said.

The post office savings scheme, and a microfinance initiative in which low-income earners can buy gold in instalments as low as Rs10 ($0.20), mirrored traditional Indian customs regarding the purchase of gold, he said.

The country's women often form associations with their local jewellers in which they make regular down-payments in return for the delivery of a gold medallion or piece of jewellery at the end of a set period.

Copyright The Financial Times Limited 2009