Chennai, Nov 22 (IANS): Reliance Money Precious Metals, a subsidiary of Reliance Capital, Thursday launched a gold accumulation plan to garner in three years a dominant share in India's unorganised gold market (jewellery and coins), which accounts for 75 percent of total gold sales in the country and is estimated at more than Rs.2 trillion.

Under the plan, Reliance My Gold Plan, launched in association with World Gold Council, a customer can invest a minimum of Rs.1,000 per month and the company would use the money for purchase of gold on a daily basis and the total accumulated funds can be redeemed for gold coins or jewellery at the end of the investment tenure.

"According to World Gold Council, 986 tonnes of gold were sold in India last year. Nearly 75 percent (over Rs.2 trillion) of the overall market is dominated by unorganised players. Our target is to have a dominant share in that in three years time," Vikrant Gugnani, chief executive of broking and distribution business at Reliance Capital, told IANS.

Gugnani said the plan offers customers an opportunity to start accumulating physical gold using a daily average pricing methodology.

"We have been witnessing a distinct increase in the demand for physical gold backed saving products in the last few years. This change in the gold buying pattern provided us an opportunity to offer Reliance My Gold Plan, the next generation gold savings product," said Gugnani.

The plan is 100 percent backed by physical gold which is held with a vaulting agency and is controlled by an independent trustee thereby offering maximum security and safety.

Gugnani said the plan is available at a minimum subscription of Rs.1,000 per month and can be subscribed for a tenure ranging from one to 15 years. A subscriber will be charged an administrative fee of 1.5 percent on each subscription, minimum lock-in period of six months and a pre-maturity charge of 2.5 percent.

The daily average pricing methodology splits the monthly subscription into equal parts and allots gold grams over 20 successive business days.

He said the subscriber has two redemption options - as gold coins or as jewellery at designated outlets.

"As of now we have tied up with 100 jewelers across the country and the number will be expanded to 1,000 going forward," Gugnani said.

The company will be offering the scheme in over 1,500 cities and towns and a media campaign will start December/January.

"The share of rural and urban in the Indian gold market is almost equal," Gugnani said.

Refuting that the company would resort to future contracts or hedging to acquire gold for this scheme, Gugnani said: "The metal will be purchased locally only against subscription. This is an accumulation and not an investment product for us to get into gold future contracts."

He said the unorganised gold market lacked transparency and uniformity in pricing while the purity of the gold was also given a concern. On the other hand, the organised market does not have a plan allowing a person to systematically accumulate gold.

On the tie-up with WGC for the product, Gugnani said: "WGC would extend its support in sourcing and tying up with partners."

The Reliance group has been in gold business for the past four years selling pure gold coins (through India Post), gold bars to corporates and also in the corporate gifting segment.

The group has sold over two tonnes of gold coins and 2.5 tonnes of gold bars.