Auction policy and auction process
|Letter Type||Normal Gold|
|Intimation cum Auction Letter||A notice in the local language, in an approved format, shall be sent to all “Actionable” pledges by registered post AD requesting the borrower to immediately pay the full dues failing which the security would be liable to be put on auction, without further notice, for recovery of the dues|
ii. Directors shall be empowered to approve modifications to the above guidelines for Auction from time to time on the recommendations of the Operations department keeping in view, inter-alia, the regulatory directives, legal position and the Fair Practice Code adopted by the Company.
A reasonable amount of EMD may or may not be insisted upon from every participant on such date as maybe decided by the management from time to time.
Directors shall be empowered to approve modifications to the points mentioned in points C- Auction in normal course and point J 1- Auction due to depletion in value of security, from time to time on the recommendations of Operations Department keeping in view, inter-alia, the regulatory directives, legal position and the Fair Practice Code adopted by the Company. Such modifications shall be reported to the Board in the next meeting for information
b) Proper notice/intimation shall be served upon the borrower as mentioned in point J (3).
c) Before serving the above notice the purity of the gold ornaments shall be re-verified internally through a competent officer / auditor. When the amount of initial estimated loss is Rs 1.00 lakh (Rupees one lakh) or above the services of an external expert appraiser shall be obtained before serving the above notice. Melt test (assaying) of a small portion of the pledged gold may be resorted to for re-confirming the purity or in the “difficult-to-assess” cases.
d) The Director shall be empowered to grant extended time for repayment to the borrower on a case to case basis on the recommendations of the Head of the Operations Dept., Corporate Office.
e) The reserve price for such spurious / low quality ornaments must be fixed keeping in view the reconfirmed assessed purity and the RBI directions issued from time to time. Expert internal / external opinion should be obtained to arrive at a realistic reserve price.
f) Auction of normal/spurious or low quality gold ornaments shall not be taken up when police or criminal case has been filed against the borrower or when there is any other legal impediment. Suitable internal guidelines regarding filing of police cases should be formulated and approved by the Director on the recommendations of the Head-Operations
|Letter Type||Depletion in Security Value||Spurious/Low Quality: Identified at the branch or before completion of the tenure of the loan||Spurious/Low Quality: Identified at the auction centre or after completion of the tenure of the loan2|
|Intimation Letter||A notice in local language should be sent to the borrower within 15 days of identification of loss in the account by registered AD calling upon the borrower to settle the loan within a maximum of 2 weeks from the date of receipt of such notice or replenish the security with additional gold failing which the company may dispose the gold through auction without any further notice.||A notice in local language should be sent to the borrower within 15 days of detection as spurious / low quality by registered AD calling upon the borrower to settle the loan within a maximum of 30 days from the date of such notice. The registered AD notice should refer to the rights conferred on the Company to dispose of the security by virtue of the undertaking of the borrower in the loan application form and clauses in the loan sanction letter (pawn ticket).||A notice in local language should
be sent to the borrower within 5
days of detection as spurious/low
quality by registered AD. The
registered notice should clearly
provide reference to the following
details, inter alia:
1. Completion of tenure of the loan.
2. That auction notice had already been sent after completion of the tenure of the loan.
3. That the Company had undertaken only a preliminary verification of the gold at the time of disbursing the loan and as per the right conferred on the Company as per the terms and conditions of the loan, to further check the purity/weight of the gold internally or by experts at any time, the purity of the gold was re verified at the auction centre prior to auction and was found to be of inferior quality.
4. That the Company is proceeding with auction as already intimated.
|Final Letter||Nil||In the case where the account remains unsettled after the issue of the above notice an auction notice furnishing the date and venue of auction shall be served on the borrower atleast 14 days before the proposed date of auction.|
If the gold ornaments find no bidders at the reserve price the course of action as under should be adopted:
i) The Auctioneer shall submit in writing that no bid was made at the reserve price fixed due to the poor quality of gold or difficulty in assessing the correct purity. This shall be certified by the Company’s official in charge of overseeing the Auction.
ii) Such gold ornaments shall be taken up for melting, either in-house or through a reliable outside agency, in the same lots as taken up for auction. Auctioneer/ his representative shall remain present during the melting activity along with a competent Internal Auditor of the Company who will certify accordingly in a register to be maintained for the purpose.
iii) The melted bars shall then be assayed for purity and put up for auction in such form with a fresh reserve price fixed.
iv) Compliance with the above steps shall be periodically subject to internal audit at intervals not exceeding 1 calendar quarter.
However, a rightful lien on such surplus may be retained, subject to proper notice, in case the borrower has other unsettled liabilities to the Company. Legal action for recovery of shortfall in individual accounts may be considered where required and justified after a cost-benefit analysis is done and put up to the Head-Operations and Executive Director for approval. Customers whose pledges have been put to auction and where the company had suffered a loss the respective customer ids may be blocked based on the directions provided by the management from time to time.