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3 banks suspend bullion trade Wednesday, April 4, 2001

The Classic Co-operative Bank crisis has forced three major banks to suspend bullion operations in Gujarat forcing the local bullion dealers and traders to depend on Mumbai for procurement of their gold requirement.

The local bullion market earlier reported a lull after the Rs 70-crore-bullion scam, which was unearthed in the first week of March. It involved fake pay orders issued by cooperative banks to nationalised banks and a couple of foreign banks.

Sources in the banking circles said that as fallout, recently the leading bullion banks, including the State Bank of India, Bank of India and Standard Chartered Bank have suspended their bullion banking operations in the city.

The state’s entire bullion business was conducted from Ahmedabad. The city was known to be controlling over 40 per cent of the country’s bullion trade.

Sources in the banking circles also informed that other Corporation bank, Dena bank, Syndicate bank and Oriental bank of Commerce, among others, had earlier suspended their bullion operations smelling a foul play in the market.

Sources also confirmed that in the present scenario they have stopped bullion trading. However, the officials refused to go on record.

This has led to the crisis for the local bullion dealers and traders Though the demand for gold biscuits (10 tola TT bars) has trickled to 1,000 TT bars per day the traders are finding it difficult to procure them.

While part of the demand for the TT bars is obtained from the MMTC the remaining is said to be met by bringing TT bars from Mumbai. Getting TT bars from Mumbai has been a costly affair for the local bullion traders as the Maharashira goveminent is charging sales tax on them.

As per the sources in the market, the TT bars at present are beeing purchased at a price much higher than the pre-scam penod. The gold TT bars from MMTC and Mumbai bullion market are costing Rs 49,400 per bar against Rs 49,100 before the scam. RBI regional director V S Das when contacted on the issue said that he was not aware of any such development.

 

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