GOLD LOAN POLICY

 

POLICY FOR “LOAN AGAINST GOLD JEWELLERY“

  • Product: To provide loans to customers against pledge of gold jewelry as collateral security
  • Loan Type and tenure of the loan :
    Loan Type: The loan is given as a demand loan.
    Tenure of the loan: All gold loans are sanctioned for a maximum tenure
    of 12 months unless otherwise specified under a
    particular scheme.
  • Eligible customer: Any individual over the age of 18 and who is the lawful owner of the Gold Jewellery offered as security as per the declaration of ownership submitted by him and fulfilling the KYC norms as per RBI and State guidelines.
  • Purposes: The loan can be extended to anyone who is having short term fund requirements like working capital for establishment / expansion of business activity or meeting personal liquidity requirements or domestic needs including medical expenses etc. Loans shall not be used for any speculative or illegal or unlawful purposes violating the laws of the Country
  • Quantum Disbursal of finance: Quantum Disbursal of finance will be decided on the basis of net weight of gold of 22 carat ornaments tendered as security, its purity and subject to State guidelines issued from time to time regarding loan to value.
    Minimum loan amount per pledge: Minimum amount of loan per pledge would be Rs.1500/- subject to the conditions that
    a) minimum weight of gold offered for pledge should be 1 gram (net weight)
    b) minimum 25% of the eligible loan amount should be availed.
  • Quantum and purity of gold that can be pledged and deductions to be considered : The minimum net weight of gold jewellery that can be considered for pledge is one gram. The ornaments shall be of minimum 22 carat purity. The weight of pearl, diamond, coral or any other stone or foreign material other than gold contained or forming part of the ornament irrespective of its value shall be deducted from the gross weight of the ornaments to arrive at the net weight for calculating the eligible loan amount.
  • Interest and charges: Our commitment to providing an interest-free gold loan is at the heart of our services. Unlike traditional loan providers, We currently don’t charge any interest on gold loan.Consequently If Interest and other charges are to be levied then the same shall be governed by the interest rate policy adopted by the Firm’s Board. The Board, or a committee empowered by the Firm’s Board shall review the interest rates and other charges periodically and approve necessary revisions as per the business requirements. Any revision in interest shall only be applicable for future gold loans and not on existing gold loans.
  • Penal interest: We believe in providing our customers with a fair and transparent experience, which is why we do not charge any penal interest on our interest-free gold loans, We aim to make your gold loan experience as hassle-free and cost-effective as possible.
  • Gold Loan Force Closure Penalty: In the event that the borrower chooses to prepay or close the gold loan before the originally agreed-upon loan tenure, a force closure penalty may be applicable. The force closure penalty shall be calculated as a percentage of the overall Disbursed loan amount, as determined by the Firm’s policies in effect at that time.The purpose of this penalty is to compensate the Firm for potential administrative, transport, handling and operational costs associated with the early closure of the gold loan, including revaluation, documentation, and administrative overheads.

    The exact force closure penalty percentage, its calculation methodology, and any applicable terms and conditions shall be communicated to the borrower upfront at the time of loan origination and included in the loan agreement.

    The Firm and It’s Board, The Board, or a committee empowered by the Firm’s Board reserves the right to revise the force closure penalty and its associated terms at its discretion, and any such revisions shall only be applicable for future gold loans and not on existing gold loans.

  • Other charges: In addition the Firm may levy other charges as below. The rate at which such charges are to be levied shall be decided by the Firm’s Board or a Committee empowered by the Firm’s Board for fixing interest rates and other charges.
    • Storage Charges
    • Security Charges
    • Processing charges
    • Service Charges
    • Documentation Charges
    • Notice Charges
    • Charges for lost Pledge Slips
    • Sms Charges
    • Auction expenses
    • Cheque re-issue charges
    • Doorstep Pick-up And Delivery charges
    • Part release charges
    • Transaction charges
    • Any other charges as decided by the Board or the Committee
      empowered by the Firm’s Board which will be intimated to the
      customer upfront.
    • Stamp duty will be collected in States where it is mandated as per
      the Stamp Act/State government directives.
  • Documentation:
    • Loan Application
    • Demand Promissory Note and take delivery letter
    • Terms and Conditions Letter, which also includes declarations and undertakings by the borrower and acknowledged by him and any other documents that may be specified by the Firm.
    • Consent to obtain Aadhaar details for authentication with UIDAI for “eKYC” purpose.
    • Any one or more of the following Officially Valid Documents (OVDs) specified by State Govt as address/ID proof for completing the KYC of the customer.
    • Identity Proof: Passport/PAN/Driving License/Voter ID card/Ration Card/ Aadhar Card or any other identity card issued by a government authority, PSU or nationalized bank, containing the photograph of the customer
    • Address proof: If any of the documents taken as identity proof also contains the address of the borrower, no separate address proof will be insisted upon. In other cases, the following documents will be taken towards address proof:
    • Ration card/latest electricity/landline telephone bills/bank passbook/bank/ Aadhar Card or any other documents issued by a government authority, PSU or nationalized bank, containing the address of the customer
  • Jewellery Handling:
    • Gross weight of the jewellery to be taken and appraised for assessing the purity. Purity Check shall be conducted as per the various methods prescribed by the Firm to make sure that the jewellery offered for pledge is of an acceptable level of purity.
    • Net weight of the jewellery to be arrived at after deducting the weight of stones embedded in the ornament completely disregarding the value of such stones. Appraiser to sign the appraisal form as proof of having done the appraisal.
    • Jewellery to be packed securely along with the weight slip and kept in the strong room/safe.
    • Separate packets to be prepared for each loan.
  • Ownership of gold: Before disbursement of the loan, Visiting loan managers and branch executives should enquire with the customers about the ownership of the jewellery being pledged for loan and the loan should be granted only after they are convinced about the genuineness of the ownership of the gold ornaments by the borrower and his capacity to own that much quantity of gold. Related authenticated information regarding ownership of gold jewellery offered as security for the loan are collected from the customers.In cases where the weight of the gold jewellery pledged by a borrower at any one time or cumulatively for various loans outstanding in his name is more than 20grams, the declaration should also contain an explanation specifically as to how the ownership was vested with the customer(For eg. Inherited, received as gift, purchased etc).
    Pledge by third party for raising loans on behalf of the customer will be allowed only on the strength of Notarized Power of Attorney.
  • Issuance of Certificate of Purity: A certificate of purity of the gold jewellery pledged as security for the loan will be incorporated in the Sanction Letter given to the borrower for the limited purpose of determining the maximum permissible loan and arriving at the reserve price for auction.Only gold jewellery of 22 carats will be accepted as security for the loan. However, in case the purity of the jewellery is found to be less than 22 carats, an option can be exercised by the Firm, at its discretion, to translate the weight of the gold by converting it into proportionate weight of 22 carat gold and state the exact grams of the gold available as security accordingly.

    Since the purity certificate is issued purely based on the averments and declaration given by the borrower and the standard methods of verification adopted by the Firm and in the absence of any fool proof method of assessing the purity of gold, no disputes/claims based on the certificate issued in this regard will be entertained by the Firm.

  • Loan to Value: The ceiling rate for granting the loan conforming to the guidelines issued by RBI and State from time to time as also the rate per gram under each scheme shall be centrally updated in the centrally monitored system in a non-editable format and advised to Visiting loan managers and Branches periodically.
  • Renewal of Loans: Renewal of gold loans will be permitted ensuring sufficient cash flow from the borrower and subject to the following conditions:
    • The existing loan should be closed by repaying the entire principal and charges up-to-date
    • The eligible loan amount for the new loan will be calculated as per the LTV prevailing on the day. Shortfall in the principal amount/charges, if any, will have to be remitted by the borrower.

However, there could be instances where the loan proceeds on renewal as per the current LTV will be sufficient to take care of the liability towards closing the existing loan and there may not be any real cash flow.

  • Safety Measures: Utmost care is to be taken to ensure the safety of the ornaments pledged by the customer. With this in view the following arrangements shall be in place.
    • Strong rooms or FBR safes.
    • Armed guard(s)/watchman at vulnerable Branches as decided by the Firm.
    • Burglar alarms, Closed Circuit Cameras and such other devices as deemed necessary shall be installed in vulnerable Branches.
    • Insurance cover against burglary/fire/natural calamities or such other risks the Firm may decide to insure against.

The adequacy of the safety measures put in place as also the insurance cover shall be reviewed on an ongoing basis.

  • Items not to be considered for accepting as security for the loan.
    • Melted bar /Primary Gold
    • Jewellery of a temple/church or any religious institutions.
    • Item specified by the Firm in the negative list updated from time to time.
    • Items where the borrower is unable to give a proof or declaration of ownership.
    • Items which are not permitted to be taken as security by RBI And State.
  • Release of Jewellery: Jewellery shall be released to the same customer on receipt of full dues including the principal, interest, penal interest and other charges, if any. Release, whether partial or in full can be done only after verification of signature, original KYC documents and customer copy of the original pawn ticket . If ticket is lost indemnity in stamp paper of required value to be obtained before release of jewellery. In case the customer is deceased, the ornament will be delivered to the legal heirs as per the procedure stipulated by the Firm for settlement of Deceased Loan accounts
  • Fraud Prevention: All kinds of fraudulent activities or attempt to defraud, whether it is by the employees or outsiders, must be brought to the knowledge of the Firm’s Management as soon as it is detected for proper action as per company guidelines.
  • Spurious Gold/Stolen gold: On finding Spurious or stolen gold pledge attempt, following steps shall be taken by the Visiting loan Manager and Branch, Attempt by any suspicious customer trying to pledge stolen /spurious jewellery should immediately be reported to the Chief Vigilance Officer at Head office and to the local police.
  • Inspection: All Branches will be periodically inspected and audited by internal audit staff at intervals specified by the Company. The audit Department will, at random, verify the quantity and purity of gold ornaments accepted by Branches for pledge. They will also audit various accounting procedures followed at Branches and ensure that the circular instructions issued by the Company from time to time are strictly being adhered to.
  • Auction: If the loan account is not closed on completion of tenure and even after sending reminders through SMS, notices/Registered notices at frequencies stipulated by the Firm, the ornaments will be auctioned after giving a minimum of 14 day’s prior notice by way of an auction notice sent by Firm or an authorized auctioneer.
    The borrower, if he chooses, can participate in the auction process complying with the conditions stipulated by the Firm/auctioneer.The proceeds of auction, net of auction related expenses and incidental charges shall be appropriated towards the loan outstanding. The Firm may decide to recover the shortfall, if any, after such appropriation by resorting to various steps including legal action. Excess, if any, shall be refunded to the customer. GST as applicable will be recovered.
  • Auction Procedure: Procedure as outlined in the auction policy approved by the Firm’s Board to be followed.
  • Staff Training: All the employees, as soon as they are inducted into the Firm shall be trained on methods of assessing the purity of the ornaments. Refresher programme will be conducted to keep them updated.

Gold Loan Policy

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