Regarding gold loans, branch officials shall remain very careful

Regarding gold loans, branch officials shall remain very careful. A few days ago,  in one branch, when a gold loan became NPA, after complying with all procedures, the gold ornaments in one account, were auctioned and sold. The bank received the full amount from the H1 bidder and the gold ornaments were delivered to the H1 bidder along with sale letter. The gross weight of the ornaments was 105 gms and net weight was 54 gms, as appraised by the bank's empanelled appraiser. The H1 bidder checked the weight, pieces of ornaments, specifications of the ornaments and the purity of the gold. However, after the sale, when the ornaments were melted,  29 gms net gold were found instead of 54 gms. The H1 reported to the bank, wanted to return the melted gold and claimed the refund of the amount paid by him. The bank has obviously declined. The H1 bidder has threatened lodging FIR against the branch head. The branch head is obviously afraid of being arrested as also facing departmental disciplinary proceedings. Apparently, there is no scope of such proceedings if the bank's rules were followed as a copy book. The branch official shall take utmost care while handling gold loans and not to depart from the bank's circular under any circumstances. Suggested: (1) Gold loan in a newly opened savings bank account. (2) Distance of the declared address from the branch. (3) Age of the person. (4) If the applicant is a male person. (5) The gold ornaments are in bulk. (6) Appraising gold ornaments by the appraiser in the presence of the bank's authorised official. (7) Weight of the ornaments in the presence of the same official of the branch. (8) Ornaments filled with stones, diamond etc. and several types of stone/ diamond in a single ornament. (9) Distinctive types of ornaments and number of pieces. (10)Record of appraiser's performance review as per bank's guidelines. (11)Proper sealing of gold packets with the bank's metal seal. (12)Opening of packets in case of necessity in the presence of authorised officers. (13) Resealing the gold packets as per extant guidelines of the bank. (14) Examining the weight machine on each occasion of taking weight of the gold ornaments. (15)Keeping proper records of ornaments including intake and offtake from the vault. (16) No substitution of ornaments after ornaments are obtained for loans as pledge and loan has been disbursed. In that situation, the existing loan account is to be closed against receipt of the outstanding balance with up to date interest/ charges, if any, and delivery of the ornaments pledged with the bank to the borrower only coupled with necessary records of delivery and a new loan is to be sanctioned as per the bank's guidelines including re-appraising of the existing ornaments along with the new one, i.e., all ornaments. All formalities shall be complied with as a new loan. (17) Since LTV is ascertained on the basis of net weight of gold and the purity, all the pieces of ornaments shall have to be examined separately in terms of gross weight, net weight, stone/ diamond fitted therein and purity. There shall be no averaging. 

The suggested points are not to decline loan proposals, but for remaining vigilant. 

Branch officials shall under no circumstances depart from the bank's extant guidelines. If any point mentioned here differs from the bank's guidelines, adherence & compliance of only the bank's guidelines shall have to be ensured.