OREANDA-NEWS  Banks in Russia are facing a shortage of gold bars after demand for the precious metal increased sharply, Vedomosti newspaper reported on Tuesday, citing experts.

Executive Director of Precious Metals Operations at Uralsib Bank Andrey Vasiliev told the media outlet that supply disruptions arose due to the limited production capacity of refineries and growing demand for gold bars from citizens.

Small ingots are more in demand among individuals, while refineries were focused on bulk purchases of large bars and couldn’t quickly adapt to new market requirements, he explained. The production of small gold bars is a more expensive process, according to experts. It is cheaper to produce one ingot weighing 12 kg than several smaller ones, Evgeny Safonov from Promsvyazbank has confirmed.

In March, the Russian government scrapped the 20% value-added tax on gold for individuals as people rushed to park their savings amid the introduction of sweeping Western sanctions. Moreover, in June, the 13% income tax on profits from the sale of gold bars was withdrawn as well. Since then demand has been growing.

Meanwhile, refineries are developing infrastructure to work with individuals, but it takes time to establish business processes, analysts from Moscow Credit Bank have said.