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BW Businessworld

Gold On EMIs

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Sarah John buys jewellery once or twice a year, but not this year. “Gold and diamond prices have almost doubled and I cannot afford them as there has been no salary hike in my husband’s company,” says John, a homemaker. For others, too, it is not buying as usual. The rupee’s fall and the 4 per cent import duty on gold have changed the plot.

With gold prices expected to soar as high as Rs 35,000 per 10 gram by Dhanteras (early November), jewellers, banks and e-tailers have come up with various schemes to make the purchase of the yellow metal more affordable.

Some non-bank finance companies have introduced a monthly gold recurring deposit scheme — you make monthly payments for a specified period, and at the end of it, the company adds one instalment to the accumulated payment and gives gold equivalent to the amount to the customer. “This way, without having any ready cash, customers — particularly those with lower disposable incomes — can also buy gold,” says Alexander George Muthoot, director of Muthoot Group. It offers a scheme called Muthoot Kanak Vrishty Insta Gold —a customer can book gold coins at the current price with Muthoot Precious Metals and make the payment in EMIs over three, six or 12  months. There is a 2 per cent service charge but no interest on the EMIs. “The customer is saved from gold price fluctuations,” adds Muthoot.

Banks, apart from offering gold and silver coins online, have tied up with jewellers to facilitate easy EMI options at no extra charge. HDFC Bank, for instance, has a three-month EMI option on gold and silver bars purchased on the bank’s credit cards. “We have also tied up with jewellers such as Gili and Malabar Gold and Diamonds to offer EMI options at no extra charge,” says Anindya Mitra, senior vice-president, retail liabilities group, at HDFC Bank.

Jewellers, too, are finding different ways to keep their customers coming back for more. Bangalore-based C. Krishniah Chetty and Sons has a scheme called the Gold Standard 1869 rate protection plan, in which customers pay for 12-60 months. The investments are protected by averaging the prevailing rate of gold, silver and diamond. So, every time one pays an instalment, the commensurate quantity of gold, silver, diamond or platinum, at the prices on that day, is credited to the customer’s account. At the end of the period, the customer can buy jewellery either at the ‘average’ rate that is applicable or the rate prevailing at the time of maturity.

“This protects the consumer even from the risks of falling prices,” says Vinod Hayagriv, managing director of the three-store chain, adding that sluggishness in the market led them to try and attract customers through such schemes. The company also exchanges old jewellery for new, as do most jewellers throughout India. In fact, 30 per cent of its sales comes from such exchanges.

Weight Loss
Some jewellers have chosen to play with size and carats. Promotions for lower carat jewellery are replacing those for heavy gold jewellery. “Consumers are now looking to downtrade for 9 carat gold jewellery from the usual 19-22 carat gold,” says Gaurav Issar, CEO,, an online aggregator of more than 100 brick and mortar jewellery retailers.

The trend in South India is to promote jewellery and gold studded in wood and marble, he says. The new segments have been promoted with various EMI schemes. “People are looking at alternatives to gold, but diamonds too are expensive,” says Issar.

Coimbatore-based Kirtilal Kalidas has waived payment of the first instalment in its 15-month savings plan called Aanandham Gold Investment Plan. This allows customers to buy gold at a protected rate. “We source our material directly from the mines and control the chain, so we are able to bring down costs,” says Suraj Shantakumar, director of Kirtilal Kalidas, a 100-store jewellery chain.

E-tailers, too, have joined the bandwagon. offers gold coins at no-interest EMIs. “Earlier, investing in gold was popular only among senior members of the family. Now, investment in gold coins and bars has also been adopted by the younger generation. So we have introduced gold and silver coins as a category,” says Manmohan Agarwal, CEO. The portal has also partnered with the likes of HDFC Bank and Citibank. is experimenting with size. “Customers are looking for larger pieces with lesser weight,” says Kalaivani Sadagopan, senior vice-president of the portal. “Design plays an important role in winning the customer over. Therefore, Italian jewellery was launched,” she adds. Italian jewellery is big but uses less of precious metal and so, is more affordable. Indian customers are looking at value and most purchases are below Rs 25,000, she says.

It seems ‘gloomonomics’ has everyone innovating to keep the customer interested. But the thing with gold in India is that it will continue to glitter despite the cost. In fact, almost 1,000 tonnes of gold was consumed last financial year, according to the World Gold Council. “Gold jewellery will sell in India no matter what happens to the global economy. But it is clear (that) this year is slow,” says Issar of


(This story was published in Businessworld Issue Dated 01-10-2012)