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Bombay Bullion Association told to stop quoting gold, silver rates

BS Bureaux

The Monopolies and Restrictive Trades Practices Commission issued a notice to the Bombay Bullion Association on Monday directing it to refrain from quoting gold and silver rates from Monday on the basis of a complaint lodged by former BBA director Dinesh Parikh.

Parikh told Business Standard: "My complaint had noted that the prices of gold and silver quoted by BBA were not accurate."

A well-placed source said: "The prices being quoted by the BBA were found to be varying sharply as compared to international bullion rates. Moreover, only last month, the price fluctuation on one gold biscuit (ten-tola) varied from Rs 50,500 to Rs 53,500 in a single day, thereby arousing suspicions".

BBA president Mukul Sonawala confirmed that a notice had been received alleging malpractices and price fixing but said that the BBA would seek a stay from the Supreme Court. He said that the MRTP Commission had issued a notice in January 1999 directing the BBA to stop quoting rates, pending an investigation. "We have not notified the prices today," Sonawala added.

Bullion sources said that the MRTP had questioned the basis on which BBA gave out the daily rates. Under the system now followed, six directors of the BBA put out quotes daily, which are then averaged out.

Quotes given by the BBA are used as a benchmark by the customs and income tax departments, news agencies and small traders. Though the trade in Bombay is not much, the price given by the association has an impact on the market.

"Small traders would lose a major benchmark if BBA is asked not to give any quotes. Customs and other government departments can always work out prices based on international bullion prices and the local duty structure," said a trader.

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