Demand for the yellow metal is likely to increase sharply by about 25% this festive season with gems and jewellery dealers being exempted from the reporting requirement purview of the Prevention of Money Laundering Act (PMLA).
The recent PMLA requirement of KYC-linked purchases of gold had delayed buying, but the latest notification removing the same will increase the pent up demand for gold jewellery. “This is likely to cause a YoY jump of 25% during the ensuing Diwali festival,” said Anshuman Mishra, co-founder and CEO, LoanAdda.com, a platform for gold loans.
Ease of doing business
The rollback of this order will definitely improve the ease of doing business. Gold prices were ruling firm at ₹31,363 per 10 grams and silver at ₹40,390 per kg in the national capital as of October 13. In the Mumbai bullion market, gold was at ₹31,315.51 per 10 grams. It was about ₹30,450 during the Diwali season in 2016 and ₹25,450 in 2015.
Under PMLA, every reporting entity is required to maintain a record of all transactions of value exceeding ₹10 lakh, all cross border wire transfers of more than ₹5 lakh and all purchase and sale of immovable property of ₹50 lakh or more.
The festive season that generally starts around Teej in August goes up to Diwali, followed by the wedding season.
These five months till December are crucial in terms of jewellery purchases and gold loans. However, till now it has been very slow and is expected to pick up during Diwali.
The PMLA guidelines, which required jewellers to keep records of customers’ Permanent Account Number (PAN) for transactions above ₹50,000, had a drastic effect on gold sales as buyers were hesitant to provide the PAN details, said Aditya Kumar, founder & CEO, Qbera.com, another gold loan portal. “Post amendment, there is a surge in demand. Currently, personal loans for gold purchase forms about 8% of our loan book and have seen spike in the volumes post amendment.”
The reversal of restrictions helped increase the demand for gold purchases, said B. Govindan, chairman, Bhima Group and president of All Kerala Gold & Silver Merchants Association. According to him, this week onwards the demand will increase sharply and continue till the end of the wedding season.
