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IBJA’s Indicative Retail 22kt Gold Jewellery Rate

Surendra Mehta, IBJA

 

India Bullion & Jewellers Association (IBJA) was established in 1919 and is now 99 year old organisation; our members include importers, bankers, NBFCs, Bullion Dealers, Manufacturers, Wholesalers, Retailers and exporters.

 

Gold rate in India has always been an issue, which was addressed by IBJA almost 90 years ago. IBJA has been declaring daily opening and closing rates of gold since 1927. IBJA’s gold rates have always been followed by our country’s Central Bank i.e. Reserve Bank of India. Various RBI notification and circular issued to all scheduled banks and co-operative banks clearly states that banks must use IBJA’s rate for lending against jewellery. This step was taken by RBI as many banks have started giving higher rates to corner the business of lending against jewellery. Thereafter, even Ministry of Finance and Reserve Bank of India (RBI) came out with notification that sovereign gold bonds areto be issued at IBJA’s benchmark rates. Even the notification states that IBJA rates must be used even for redemption of sovereign gold bonds. Needless to mention that all government organisation and public sector unit like Income Tax, GST, Customs, etc. uses IBJA rates not only for valuation but also for auctions. All market trades on a day to day basis are also settled at IBJA price. Securities& Exchange Board of India (SEBI) is also considering using IBJA’s rates as reference rate for commodity exchanges.

There has been continuous request from the customers as well as from jewellers to provide indicative retail rates for 22 Kt gold jewellery. After various deliberations, meetings and thought process, it was decided that indicative retail rates for 22 Kt Gold jewellery must be worked out scientifically and logically. A formula was derived wherein fixed cost of average size retailer was considered to work-out the new indicative 22 Kt retail rates for jewellery. The inventory holding cost, logistic cost and hedging cost etc. was also taken into consideration to work-out these rates.

 

In the Union Budget 2018, finance minister clearly stated that gold is to be made an asset class. IBJA realised that all other asset class have transparent rate and pricing mechanism except gold. Thus, as the apex association, it was necessary that customer starts getting fair and transparent price while buying gold jewellery. IBJA could not run away from its responsibility and accountability towards customers. It is necessary for any trade association to protect its members but it is equally important to ensure that fair and ethical business practises are run by its fraternity for customers.

 

Business needs long term vision and customer’s confidence. Similarly, customers are satisfied only when they get certified purity of gold jewellery at a fair and transparent price.

In India hallmarked gold from Bureau of Indian Standards (BIS) ensures purity or fineness. In a country where millions invest their life savings into gold purchase, they deserve pure and certified gold at fair and transparent price. While BIS is the authority for hallmarking and it was necessary to self-regulate the price of gold jewellery. IBJA stepped into these territories and started giving 22 Kt indicative retail jewellery price through missed call on 8955664433 wherein customers or jewellers get these rates within 30 seconds in their inbox through SMS.

This indicative rates do not include making charges and 3% GST.

 

There are about three lakh jewellers in this and a survey report shows that nearly 23% of the business has shifted to branded and organised players and this could reach upto 40% by 2020. The number of organised and branded players is appx. 200 viz-a-viz 3 lakh unorganised jewellers. Out of these 3 lakh jewellers, only 25000 jewellers are BIS approved.

IBJA is confident that these 3 lakh unorganised jewellers will start charging its customers , IBJA’s indicative 22 Kt retail gold jewellery rate and they would also gradually get themselves registered with BIS, so that customers start getting same purity gold what a branded or organised player is selling but at a much cheaper, fair and transparent price.

It is also important for customers to understand that he should buy pure gold and not branded gold because when he sells gold would get money for purity of gold only and not for brand. The current advertisement campaign of BIS also says that “Hallmarkhai,tho Sona Hai”. Thus a customer also needs to understand that gold brand in India is determined by BIS and not by private players.

 

We are sure this customer connectivity awareness will bring result in the next one year by converting a customer from branded showroom to “Ghar Ka Sonar”.

 

Disclaimer: Views are personal and not the views of the