Senior SBI and HDFC officials confirmed the development. The idea behind this is that since banks are anyway selling gold, allowing them to buy will encourage customers to buy more, according to a senior bank official.
The move will also provide more liquidity, quality assurance to this asset class for retail investors. When retail investors have to sell gold, they approach a jeweller. In most of the cases, these jewellers offer them 5 to 10 per cent less.
The entry of banks would bring about a level-playing field. In the proposal sent to RBI, banks have also asked the regulator to prescribe a method for buyback. "Buying gold at the retail level can get tedious. Banks are discussing with the regulator on how to implement it," the banker said.
Ideally, it should be an instant transaction at branches where a customer gives gold and gets paid immediately. However, banks need to check the purity of gold before paying the customer. Currently, none of the bank branches are equipped to check the purity of gold.
If the proposal gets approved, gold can become a more preferred investment class for retail investors. "It will bring in more transparency and lead to standardised commissions in buying and selling of gold," said an investment adviser.
