Overview
Gold loans are sanctioned as demand loans against the pledge of gold jewellery as collateral, generally for a maximum tenure of 12 months. If the loan is not closed on or before the due date by repaying the principal, interest and any charges, the ornaments are liable to be auctioned to realise the dues. “Auction” means realising the pledged ornaments through a public auction, including online auction. The Company makes earnest efforts to reduce auctions by sending periodic reminders and encouraging customers to pay interest, release the jewellery, or renew the loan before the due date.
When an auction may be triggered
- The loan remains unpaid beyond the due date as per the sanctioned tenure.
- Default in payment of interest for 6 consecutive months.
- Breach of the terms and conditions of the sanction letter.
- The borrower signs a declaration of inability to pay and consents to the auction.
- Depletion in the value of the security due to a fall in gold prices, where the borrower does not repay the shortfall or pledge additional gold within 14 days of demand.
Notice to you
Before an auction, an intimation-cum-auction notice is sent in the local language along with an English translation, in an approved format, giving the date and venue of the auction at least 14 days before the proposed date. Notice is sent by registered post AD / speed post / SMS / email / WhatsApp. Paper publication is made in a local daily and a national English daily. You may redeem your ornaments up to the close of business on the day before the auction by paying the full dues.
How the reserve price is fixed
The reserve price for pledged ornaments is not less than 85% of the previous 30-day average closing price of 22-carat gold as declared by the India Bullion and Jewellers Association Ltd (IBJA). For jewellery of lower purity, the floor price is reduced proportionately. An auction is conducted only where a minimum of 3 bidders are available, through an open bidding process; the highest bidder (H-1) is declared successful.
Your rights and protections
- You may redeem or renew your loan any time before the auction by paying the dues.
- Part payment of principal/interest is accepted up to the loan closure due date.
- The auction is conducted in the same branch where you availed the loan, and you may participate as a bidder.
- Auction proceedings are completed within 3 months from the loan due date.
- Any surplus after settling your dues is held in a separate escrow account and refunded to you — typically credited to your bank account within 7 days of receipt of the auction proceeds.
- Ornaments in accounts where the police or a court has directed against auction are not taken up until the ban is lifted.
This is a summary of your key rights. The full board-approved Gold Auction Policy governs in all cases and is available for download above.