State Bank of India planning gold ETF, eyes $51 mn

MUMBAI: India's top lender, State Bank of India, plans to launch a gold exchange traded fund (ETF) in 2008, hoping a booming economy will boost demand for the yellow metal, its chairman said on Monday. State Bank, which has nearly 10,000 branches and controls nearly a quarter of India's banking business along with its associates, aims for "nothing less than" two billion rupees ($51 million), O.P. Bhatt said on the sidelines of a conference. India's gold ETFs are less than a year old, but already three players have collected more than three tonnes of gold. Bhatt said the bank has a new thrust on precious metals and was interested in being a part of several plans. India is the world's biggest gold consumer, importing about 700 tonnes a year to add to recycled old stocks. Gold is mainly used as jewellery in India and forms a part of dowry that parents give their daughters at their marriage. A booming economy that has been growing at about 9 per cent a year has boosted incomes, raising expectations for more gold demand in the nation of 1.1 billion people. "This (economic prosperity) can increase gold consumption by 5 percent a year," Bhatt told at least 300 people attendinc the London Bullion Market Association conference in Mumbai. State Bank is in talks with temples to start a gold deposit scheme, where the hoarding will be put to productive use by the bank in the form of loans, he said. "We are talking to few temple authorities... it could take few months," Bhatt said. "We will give the temples some incentives." India is estimated to have stocks of 15,000 tonnes of gold that is non-productive, he said, adding the deposit plan was a good way to generate some income. He said 10 to 100 tonnes of gold could be collected by the bank. Sales of gold coins by State Bank will be expanded to 1,000 branches from 100 now. Source: http://economictimes.indiatimes.com