India exch eyes trade of 100 T recycled gold

MUMBAI, June 30 (Reuters) - India's National Spot Exchange Ltd (NSEL) is aiming to trade 100 tonnes of recycled gold in a year from now under a new 'domestic gold' contract launched on Tuesday, a top official of the exchange said.

"India's household stocks of gold are at 20,000 tonnes. Even if we manage to get 100 tonnes, that will be quite a lot," Anjani Sinha, managing director of NSEL told Reuters, when asked what the target of the exchange was. The exchange launched small-sized contracts of 100 gramme bars and 8 gramme coins on Tuesday, all made out of locally recycled scrap gold.

On day one, 25 kg gold was sold, Sinha said.

NSEL, promoted by software company Financial Technologies (FITE.BO) was launched in October with the aim of attracting traders hoping to have a transparent platform for buying and selling physical gold. [ID:nBOM444719].

Currently the delivery centres are in Mumbai and Ahmedabad cities in western India, but Sinha said they would be increased to 40 in a year's time.

The new 'domestic gold' product seeks to tap small investors selling their gold holdings such as broken bits of jewellery or old coins for liquidity.

These investors are advised to go to refineries approved by NSEL to turn the scrap into bars and coins that can be sold on NSEL to traders and jewellers. India, the world's biggest consumer of gold, has seen heavy sales of scrap gold in the last couple of years as the metal aimed at new highs in the backdrop of the global economic meltdown.

(Reporting by Ruchira Singh; Editing by Keiron Henderson)