Dwelling on the ills of the trade, Girirajan said that financial institutions have been aggressively marketing gold in it primary form of coins and bars.
Even the department of posts was in business, allowing a private sector player the advantage of its huge network. A sizable chunk of imports was contracted by various agencies and banks.
As a matter of custom, most traditional jewellers committed themselves to buying back gold ornaments, coins and bars. The normal spend does not three per cent in the case of coins and bars.
But commercial banks and agencies do not buy back bullion. Every time they wanted to replenish stocks, they were compelled to import sizable quantities.
“In other words, there were no recycling in the secondary market,” Girirajan said. Commercial banks have often coerced customers to buy gold from them.
Non-banking finance companies too have been present aggressively in the market financing purchase of coins and bars. Borrowers had to pay as little as 10 per cent upfront.
Studies conducted by the association had shown that demand for fabricated jewellery had been fairly stable for the past few years and might even be slightly on the decline.