Auction Policy

The term “Auction” used in the policy shall mean realization of the security through Public Auction only.

The Company shall have a dedicated Auction Department at the Corporate Office (Auction Dept) to initiate, supervise and monitor the auction procedure including adherence to the approved policy

Auction process must be commenced in respect of all accounts on completion of the tenure of the loan on which interest due has not been serviced in FULL or where the account has not been settled. The auction must be completed within 3 months of completion of the tenure of the loan. Discretionary powers to defer auction in accounts where at least 75% of the interest due has been paid shall be vested with the Directors

Auction Centre shall be finalized in line with the regulatory norms/ directions and internal guidelines of the company which shall be in compliance with RBI/statutory norms. Physical transfer of gold from various branches to the auction center’s/offices shall be carried out in line with the regulatory/internal norms/directions which shall be subject to modification from time to time.

Letter Type
Intimation cum Auction Letter
Normal Gold
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 i. If the AD card is not received within a reasonable period, the Auction Dept. shall apply to the post office and obtain a certificate of delivery to the addressee from the post office. Alternatively, if the AD card is not available the auction notice may be served on the borrower personally by an employee of the Company and signature of the borrower obtained in the duplicate copy of the notice.
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.

Public notification of auction/advertisement/display of information and other related procedures shall be in line with the applicable rules, regulations and guidelines issued by competent authority from time to time

Pledges taken up for Auction must be segregated into appropriate / convenient lots to facilitate disposal based on various parameters such as assessed purity, quantity of gold, expected participation of bidders, prevailing market prices etc.

Proper and acceptable documents for identification of the participants in an auction should be obtained before permitting them into the auction hall. The usual documents taken for customer account KYC compliance is to be accepted.
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.

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Auction department shall regularly monitor the realizable value of gold and in any instance where the realizable value of gold is less than the actual value, such accounts shall be taken up for auction even before the completion of the tenure of the loan and in accordance with the directions laid down 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

a) 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 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 centre or after completion of the tenure of the loan2.

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

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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.

Once auction of the pledged gold is completed in line with the norms of the Policy, and after receiving the bid amount, the relevant lot is settled with the successful bidder. Thereafter, the surplus from the s aid auction, if any, is first adjusted to the said Customer’s old loss and existing dues. The remaining s surplus is to be refunded to the Customer.
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.

In line with the FPC guidelines, Public Auction of the pledged security shall be carried out only through Auctioneers empaneled by the Company with the approval of the Board of Directors.

The Company or any of its related entities shall not participate in the Auctions. Further, there shall be an arm’s length relationship in all transactions during the auction including with group companies and related entities.

All registers and records mandatorily required under law and as per instructions issued by the Company shall be properly maintained and updated under the safe custody of a designated senior official and subject to periodical internal audit. Suitable instructions should be issued in this regard. Compliance shall be ensured by the Head of the Auction Dept.