Sanjeev Bhatia, CFO, PC Jeweller, says that currently the retail jewellery companies is adhering to the norm of taking a PAN card copy from customers who are buying gold above Rs 5 lakhs.
A possibility of new stricter KYC norm for customers buying jewellery above Rs 50000 will definitely attract customer resistance. But, once the rule becomes a law, then things will normalise to a level. However, it is too premature to comment.
Below is the edited transcript of his interview to CNBC-TV18.
Q: There are apprehensions that stricter Know Your Customer (KYC) norms may impact volume growth of jewellery companies. Will that be a possibility for consumers buying jewellery above Rs 50,000? Do you think you will have to do much more KYC in order to sell to them?
A: Till date, the rules for the new Act have not been notified. So, it is difficult to comment if retail jewellery sector would be covered under the same and purchase up to what level would be covered under KYC norm. It is premature to comment.
Q: If we assume that the government clears the norm and they are trying to crack down on gold jewellery buying, do you think Rs 50,000 could be an adverse limit? Do many of your consumers buy over Rs 50,000 and do they pay in cash which could create a KYC problem?
A: Till date, we are complying with the rule which says that any customer who purchases above Rs 5 lakh is supposed to deposit his Permanent Account Number (PAN) card with us. Customers showed initial resistance but slowly they are getting use to the norms.
Q: Do you expect customer resistance if the threshold is Rs 50,000?
A: We definitely expect customer resistance for any new measure. In jewellery industry Rs 50,000 is a very small amount, considering rising price of gold and other considerations.
Q: With this, cash transactions may come to a standstill. Will that reduce sales?
A: Till date there is nothing on ground. Hypothetically, tomorrow if any rule like this comes which we may not be able to prevent, then it will be an industry-wide phenomena. We will have no option but to comply with those rules and so does the customer. If there is a rule of law in place, if it adversely affects the demand or not is different, but if there is a rule one has to comply.