Bank of Nova Scotia eyes retail gold market in India

Mumbai: Canada's Bank of Nova Scotia is targeting India's retail bullion market, hoping to replicate its strength in the wholesale market, a senior bank official said yesterday.

Soaring gold prices have stoked people's interest in gold as an investment product as opposed to jewellery, the traditional but pricier way to hold gold.

Nova Scotia is a big player in the bullion market: Last year it imported 225 tonnes of gold out of India's total imports of 724 tonnes, according to Rajan Venkatesh, the bank's marketing director for India bullion.

But it is a relative newcomer to the crowded retail market.

"We are making a gradual but firm entry into India's retail market," Venkatesh told Reuters in an interview. "A suite of products for the retail segment is on the cards."

Nova Scotia's bullion division, better known as ScotiaMocatta, is set to launch gold coin products in up to 12 cities before the year ends as more and more Indians take to buying gold as a financial asset, Venkatesh said.

Last month it began selling gold coins of five and eight grams in the southern cities of Chennai, Coimbatore and Bangalore during the Akshaya Trithiai festival.

In the next few weeks, the imported, Scotia-branded coins will be glittering in the windows of jewellery shops in New Delhi, Ahmedabad and Kolkata.

"If it becomes a success, it could have the potential to contribute substantially to our India revenues in two years," Venkatesh said.

Nova Scotia entered India in 1984 targeting corporate and commercial banking clients, but became a well-known supplier of bullion after the government allowed banks to import gold in 1997.

As part of its retail thrust, the bank is also looking to launch gold certificates and a gold accumulation plan that would give investors physical gold or its equivalent in cash upon redemption.

"We have applied to the central banking authority [Reserve Bank of India] for approval to the gold certificates plan," Venkatesh said. "We would need a gestation period of a month or two to launch the product after we get the approval."

He said the bank hasn't applied for approval for the accumulation plan yet as it wants to go "a step at a time" in this new business area.

Nova Scotia may have a tough time carving out a niche for itself in the brand-conscious Indian market. Already, the retail sector is crowded with several banks, including ICICI Bank and HDFC Bank selling coins over the counter and small traders selling bullion manufactured in local refineries.

Nova Scotia sells its products through its existing clients, most of whom are jewellers. The bank has only five offices in India, compared with the vast networks of its rivals who are also pushing bullion sales in a big way.

But it is pinning its hopes on the surge in interest in gold products among individual investors.