Auction Policy

Preamble

Auction Trigger in the Normal Course

The term “Auction” refers to the realization of security created against the loan through a public auction.

• One month before the loan due date ( i.e. In case of 9 month scheme, in 8th month or even earlier if recovery seems difficult, in case of 6 month scheme in 5th month) or wherever interest payment is overdue for more than 120 days and post 31-03-2025 wherever interest payment is overdue for more than 90 days. If the loan period is over and is due for closure the same can also be put for Auction if not closed.
• Registered Auction Notice 1- One month before the loan due date (i.e. in the 8th month/5th month)
• Registered Auction Notice 1- In case of EMI loans, all loans where there is continuing default of 2 EMI’s, at the end of 2nd default
• Registered Final Auction Notice 2- Immediately in 12 month/9/6 month for all loans where 100% interest up to 12 M /9/6 months has not been paid as per Gold loan agreement or where due to Gold price fluctuation recovery seems difficult. This will be also applicable when the loan tenure is over.
• As on any date- Registered Notice with auction date for probable loss accounts identified as per Head Office directions for which registered notices were sent for increasing margin money and if not done within 30 days.

General Rules

No extension of the loan period will be permitted in deviation from the above.

Auction proceedings will be completed within 2 months from the date of the first Auction Notice.

Requests for postponement of the auction by branches/offices will not be entertained generally unless the Head Office (H.O.) is convinced about the genuineness of the request in writing and with sufficient documentary evidence.

Part Payment

Part payment of Principal/Interest will be allowed at any point of time up to the loan closure due date as per the loan sanction. Thereafter, part payment is not allowed.

However, auction of the collateral security in a loan account will be conducted as per the Auction Policy irrespective of the part payments made.

Branches should not credit to “Sundry Payable a/c” any amount received from borrowers during the process of Auction. Any amount credited to “Sundry Payable a/c” will be appropriated towards shortfall in Auction.

Postponement of Scheduled Auction of an Account

Postponement of a scheduled auction shall not be allowed generally. However, it may be permitted by one more month if at least 100% interest dues are paid immediately and the loan is closed within one month.

If the loan is not repaid within one month, the auction will be carried out in such cases notwithstanding the remittance made towards interest.

Auction Trigger in the Event of Extraordinary Development

1. Auction due to depletion in security value (auction before completion of tenure)

   If the Company has a view that there is contingency on account of gold price fall, demand may be made on the borrower to repay a certain sum of money per gram of gold pledged by him with us to make good the shortfall or to pledge additional gold to bring the value of security on par with a certain advance rate per gram informed to him.

   This may be done selectively customer-wise, scheme-wise, or geography-wise as decided by the Committee.

   In the event of the Customer not obliging to the demand made by the Company within 14 days, the Company shall trigger auction and send a Registered Auction Notice.

2. Auction of gold ornaments identified as spurious/low quality
   1. Accounts in which pledge of spurious/low quality gold ornaments have been detected subsequent to disbursement may be taken up for auction even before the completion of the tenure of the loan, from the date of pledge, subject to the under-mentioned compliances. The said procedures shall also be followed for spurious/low quality accounts/pledges identified at the auction center or after the completion of the tenure of the loan.
   2. Proper notice/intimation shall be served upon the borrower.
   3. Before serving the above notice, the purity of the gold ornaments shall be re-verified internally through a competent officer/auditor. 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.
   4. The reserve price for such spurious/low purity ornaments shall be fixed keeping in view the reconfirmed assessed purity and the RBI directions issued from time to time. A realistic reserve price will be fixed as per the purity of the ornaments assessed.
   5. Auction of normal/spurious or low-quality gold ornaments shall not be taken up when police or criminal cases have been filed against the borrower or when there is any other legal impediment.

Auction Process

Compliance of all formalities required for Auction as described in the following paras shall be ensured before conducting such Auctions.

1. Loan accounts for auction shall be identified, and registered notices shall be sent as per the timelines prescribed above.
2. Company/Board-approved Auctioneers appointed at various centers shall be assigned with the Auction process.
3. Registered Auction notice with acknowledgment due shall be served to all such identified borrowers, giving 14 days’ notice period to ensure sufficient time and opportunity for redemption.
   • Paper publication in a local daily in the local language and in another national daily in English shall clearly specify the place, time, and date of auction, also giving time for redemption up to the close of business on the preceding date of the proposed auction.
4. Surplus, if any, available in the auction sale proceeds over and above the dues shall be refunded to the borrower within 30 working days after receipt of the full auction proceeds.
   • A rightful lien will also be retained against such surplus, subject to proper notice to the customer in case the borrower has other unsettled liabilities to the Company.
   • Steps, including legal action for recovery of any shortfall after appropriating the auction proceeds, shall also be initiated wherever feasible and after analyzing the cost-benefit.

The refund of surplus will be intimated to the borrowers, and intimation will be sent to the last known mailing address of the customer. Payment will be effected by RTGS/NEFT/IMPS or “A/c Payee” crossed cheque.

• Cheques for small amounts will be delivered to the customer through the Branch from where they have availed the loans.
• Wherever Bank details of the customers are available, the amount will be credited directly to their accounts.
• In case the intimation cover is returned undelivered due to any reason, efforts will be made to locate the customer and hand over the cheque to them.

Auction Procedure

Ornaments in unredeemed accounts listed for auction will be put up for sale through a public auction procedure wherein the prospective bidders participating in the auction shall quote their prices over and above the minimum reserve bid price. An auction will be carried out provided a minimum of 3 bidders are available as participants.

The auction of unredeemed gold will be conducted at the Head Office (H.O.), the same branch, or the same district from where the customer availed the loan by pledging gold, giving an opportunity to the customer also to participate in the gold auction. In case of branch auctions, the respective Branch Managers will be authorized by the Company/Board-approved auctioneer to conduct the auction on their behalf subject to the following conditions:

• One can participate in branch auctions subject to the deposit of EMD specified and submission of acceptable documents as ID proof, PAN card copy, and GST registration (where applicable).
• A customer releasing their gold ornaments during the branch auction will be permitted to do so after paying the total outstanding amount or participating in the auction subject to compliance with the terms and conditions for participating in the auction.

In case of auctions scheduled at branches, the following records should be maintained irrespective of whether auctions are conducted or not. Such records should be authenticated by the Branch Manager as the authorized representative of the Approved Auctioneer:

• Details of auction participants.
• Auction minutes.

In case of sales by auction conducted at branches/auction centers, the following registers/records must also be maintained in addition to the above:

• Bid details/register indicating the bid rate of all bidders.
• Sales Invoice.
• Detailed auction record.

All records maintained at the auction center should be authenticated by the Company/Board Approved Auctioneer who conducts the auction or their authorized representative. In case the auction could not be conducted at the H.O. or branch on the scheduled auction day due to reasons like lack of a minimum number of bidders, the branch will display this information on the branch notice board. The auction will take place on the date specified in the newspaper or subsequent dates.

Fixation of Minimum Bid Price

The Minimum Reserve bid price for each lot shall be fixed based on the following:

• Prevailing Market price of gold based on the rates published by the Indian Bullion and Jewelers’ Association Ltd.
• Total dues to be received in the loan account, which includes advance and interest up to the date of auction.
• General quality of the gold. In case the ornaments are found to be of purity less than 22 carat, the company will be at liberty to quote a lesser floor price for the lot. The net weight will be converted to 22 carat after making appropriate adjustments for lower purity, and the rate of 22 carat gold will be applied.

While auctioning the gold, the reserve price for the pledged ornaments will not be less than 85% of the previous 30-day average closing price of 22 carat gold as declared by The Indian Bullion and Jewelers’ Association Ltd (IBJA). The value of jewelry of lower purity in terms of carats will be proportionately reduced.

The bid shall be confirmed in favor of the bidder making the highest bid. In the event of bidders ganging up or forming a cartel to take undue advantage, the right to postpone the auction to another date shall be exercised.

Bidders will be given a maximum period of 2 days from the date of confirmation of sale to remit the amount. In case of default, the company has the right to either cancel the bid or allow further time of up to a maximum of 3 more days. In such cases, the company may charge interest at 24% p.a. for the number of days from the date of default to the date of remittance. The company may accept, at its discretion, the bid of the bidder who quoted the next highest amount if the first bidder fails to remit the bid amount within the specified time.

This condition will be incorporated into the agreement with the bidders.

Documents Maintained & Disclosures

Revisions or Deviations in the Above Policy

1. Risk Management Committee consisting of the following members is authorized to examine individual cases and permit deviations from the above policy selectively or wholly or for a particular period of time as deemed fit by the Committee.

Members of the Committee

• AMIT GULATI – Director
• VARUN BANSAL – Director