Gold business comes to standstill in Kurnool

Kurnool: Gold bars, biscuits, coins, you name it and this small vibrant town has it. All at affordable rates. Volume no bar. Value no limit. It could absorb anything from a few lakhs to tens of crores of rupees. Now all that will be history, if the gold traders have their say on the lucrative business losing all the glitter because of demonetisation.

On an average it used to transact 20 to 25 kg of gold with a turnover of Rs 5 crores to Rs 6 crores. On festival days and election season, it could well be many multiples.

Proddutur bullion market shot to fame as a second Bombay when Morarji Desai government in 1978 demonetised higher denomination currency and sold gold on tenders. Since the highest bidders for gold tender happened to be from Proddutur, the town got the sobriquet second Bombay.

Now the demonetisation move appears to take away the second Bombay tag from Proddutur as the business was almost stagnant in this glittering town. Old timers rue that city has been robbed of its sheen as the Yellow Metal Capital of Rayalaseema. Proddatur town in Kadapa, popularly called second Bombay for the sheer volume of gold traded, has now lost all its sheen and glory. The demonetisation move dealt a body blow to the flourishing gold business in this business town of region.

Busetty Ram Mohan Rao, vice-president, AP Gold, Diamond, Jewellery Merchants Association and also vice-president of Proddutur Gold Merchants Association, said, “It's over. The   business is finished. There is no hope for revival of gold trade in Proddutur.”

Speaking to this newspaper, he said that withdrawing of Rs 500, Rs 1,000 notes has been a blow to the traditional business of gold merchants in this vibrant town.

About 400 families are running gold shops here. On an average about 20 to 25 kg of gold is traded in volume terms. So far as value of daily turnover was concerned, it could be anywhere between Rs 5 and Rs 6 crores per day. With the latest development, the future of these shops is at stake, he said.

Ram Mohan Rao said that demonetisation move would help only the corporate sector. Gold and jewellery companies are going to make a killing in the market but it is the end for small and medium traders of gold, he said.

Already the impact of demonetisation on the common man is being felt in the last two days.  "We are telling them not to come with big notes. They don't have small denomination money, resulting in no business for us."

Villagers who used to come to the bullion market in Proddutur had the habit of getting weighed in Dharma Kanta where no charges for weighing the yellow metal were collected. Even the Dharma Kanta is out of use since two days, he said.

Gold loan business to pick up:
With the ground reality not favouring trading in gold, it is expected that gold loan business would pick up in the days to come. Bankers belonging to nationalised banks and private NBFC banks are seeing good business opportunity in extending gold loans, said a market observer.
EOM/Ds Reddy