Indian bank to start selling silver bars

HDFC, a large gold seller is looking to sell into the silver retail market because it says investment demand is growing faster than jewellery.

MUMBAI (Reuters) - 

India's HDFC Bank (HDBK.BO: Quote), a large gold seller, is looking at offering silver bars for sale in some cities because of interest from investors, a bank executive said on Wednesday. A sharper rise in silver prices than gold over the past one year has sparked demand for the metal and could make it an additional item on investment portfolios.

"Silver bars in select cities is an option we are considering," Seshan Ramakrishnan, head of the bank's retail liabilities product group, said in an emailed reply to questions.

"As an investment option, silver was never accorded enough importance. However, off late it has started catching investors' attention too," he said.

Silver XAG= has jumped more than half over the past 12 months to $17.3 an ounce, while gold XAU= has climbed 17.5% in the period to $1,041.8 an ounce.

"The possibility of playing on the volatility of silver is much higher. The rise in prices is also sometimes higher," said Nayan Pansare, an analyst who works for gold jewellery exporting companies.

Ramakrishnan said new products were on the anvil and the market should see some of this in the coming months.

HDFC Bank is one of India's top sellers of gold coins and bars for investment, a segment which accounts for about 30 percent of sales in the world's biggest gold market.

In 2008, India imported 501.6 tonnes of gold for making jewellery and 211 tonnes for investment, data from World Gold Council showed. (Reporting by Ruchira Singh; Editing by Ranjit Gangadharan)

© Thomson Reuters 2009 All rights reserved

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