Bombay Bullion Association to develop a software for the same
Diversity in the pricing of the bullion and jewellery items would soon be a thing of the past, according to a proposal by the Bombay Bullion Association (BBA).
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 BBA, the apex bullion trade body.
A common software is being developed for the purpose, which would allow all the leading dealers to feed the price every minute. The software would automatically average the prices, which would be considered as the benchmark of the prevailing gold price in Mumbai.
“Currently, dealers with high inventory sell their gold holding at a lower rate than the prevailing price quoted by banks. In contrast, those with lower inventory level always try to get a premium. This creates a massive price difference of up to Rs 200 per 10
Currently, all dealers quote differently to their clients, depending on their purchase cost.
“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 on our membership base,” said Kamboj.
The benchmark price, however, would be at par with the prevailing rate announced by banks, he added.
On the recent comment by Finance Minister P Chidambaram that people should not 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 (non performing asset)?”
Kamboj stressed the need to clean up the malpractices of the industry, which malign the reputation of even genuine traders.