Nabil, Sunrise prepare to import gold

KATHMANDU, July 31 - With the growing interest of people to invest in gold, an increasing number of banks are starting to deal in the yellow metal as an additional banking product to offer to their customers.
Nabil Bank and Sunrise Bank are preparing to import gold soon while a number of other banks like NIC Bank and Ace Development Bank are already doing so.
Nabil's chief executive officer Anil Shah said that his bank was preparing to import gold within the first quarter of the current fiscal year.
"The bank's board has already decided to go for gold trading, and we are now seeking partners in the Middle and Far East for the purpose," he said.
The bank will bring gold from Dubai as it is the most accessible country for Nepal, said Anupama Khunjeli who oversees the gold trading department at Nabil. "The bank will also give loans against gold," she added.
"There is an increasing trend of investing in gold in Nepal," Shah said. "We want to tap this market."
Sunrise's CEO Kishor Maharjan said his bank was going to import gold within a month. "We are planning to import from 1.5 to 2 tons initially in a year," he said.
He added that there were good prospects for earnings with volume sales although the profit margin was low.
Soaring gold imports during the last two years also show how the gold market in Nepal is expanding.
According to Nepal Rastra Bank statistics, the import of gold soared to Rs. 11.71 billion during the first 10 months of the last fiscal year 2008/09 against Rs. 3.24 billion during the same period in 2007/08. Gold imports in 2006/07 were worth just Rs. 842.4 million
After the government removed gold from its list of prohibited imports on Feb. 16, 2006, financial institutions and other legally registered firms became free to import gold.
The growing tendency of people to purchase gold as a safe investment is mainly responsible for the rise in import, said bankers.
Bijaya Satyal, chief executive officer of Commodities and Metal Exchange Nepal (COMEN) said that there were about 2,000 committed gold investors in COMEN. "The number is expected to grow by 20 percent every year," he said.
COMEN is a paper gold market where trading is done with no yellow metal being physically transferred between the traders. According to Satyal, more than 100 kg of paper gold is traded daily at COMEN. According to gold dealers, about 25 percent of the imported gold is used for investment purposes while the rest is used to make jewelry.
Ace Development Bank CEO Siddhant Raj Pandey said that his bank had been importing gold for a year for trading on the paper gold market. He added that about 300 kg of gold had been traded during the year from Ace.
Tej Ratna Shakya, president of the Nepal Gold and Silver Dealers Association, said that growing competition in importing the yellow metal would make the market competitive which would benefit all including retailers like him.