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 Bank of India
Head Office BU - Rural

Branch Circular No.: 115/181

181 Sub: Rural/ 2021-22/
Sub-subject: General/Gold Loan
Ref : HO/Rural/DP/ Date: 30.09.2021

CIRCULAR TO ALL BRANCHES / OFFICES

MASTER CIRCULAR- STAR GOLD LOAN SCHEME (POLICY 2021)

We refer to our latest Branch Circular No.115/116 dated 05.07.2021 regarding

Master Circular on Star Gold Loan Scheme.

2. Looking into the scope, tremendous competition in the market and in order to make
our scheme more competitive, we have modified certain areas in the existing scheme. The
modifications have been approved in the Board meeting dated 24.09.2021. The
modifications are attached herewith alongwith Star Gold Loan Policy (Revised, 2021) for
your ready reference.

3. The modifications will supersede all the existing guidelines. All branches are advised
to follow the guidelines given in Star Gold Loan Policy (Revised, 2021) meticulously.

4. If you need any clarification/guidance, you may refer to us through your ZO/NBG
Office.

(NITIN DESHPANDE)
GENERAL MANAGER

1
 EXECUTIVE SUMMARY- STAR GOLD LOAN POLICY (Revised-2021)

N Item Existing Guidelines Updated Guidelines

Valuation of Gold jewellery/ornaments/ coins accepted Gold jewellery/ornaments/ coins
gold as security will have to be valued at the accepted as security will have to be
jewellery/ average of the closing prices of 18, 22 and valued at the average of the closing
ornaments/c 24 carat gold for the preceding 30 days or prices of 18, 22 and 24 carat gold for the
oins current rates whichever is lower as quoted preceding 30 days or current rates
by the India Bullion and Jewellers whichever is lower (to be updated in
Association Ltd, to be updated on weekly system by BU-Rural Department on
basis by BU-Rural Department. weekly basis or intermittently in case of
drastic reduction in gold rates), as quoted
If the gold jewellery/ ornament is of purity by the India Bullion and Jewellers
less than 22 carat, the branch should value Association Ltd.
it as 18 carat.
The valuations for 19, 20 and 21 carat
gold will be based upon corresponding
purity/ fineness in relation to 24 carat and
quoted price of 24 carat.
2 Delegation Delegation of powers for sanction of loan Delegation of powers for sanction of loan
of Powers against gold jewellery/ornaments/ coins, against gold jewellery/ ornaments/coins,
irrespective of category: irrespective of category:

Authority Limit Authority Limit

Scale-I Rs.4.00 Lakh Scale-I Rs.4.00 Lakh
Scale-II Rs.10.00 Lakh Scale-II Rs.15.00 Lakh
Scale-III & above Full powers Scale-Ill & above Full powers
- In case of leave of regular Branch Head, - In case of leave of regular Branch Head,
the Officer holding charge of the branch will the Officer holding charge of the branch
exercise delegation as per his scale. will exercise delegation as per his scale.
All delegation to be reckoned on per
borrower basis.
Restriction No advance should be granted against pure Restriction is to be removed and all gold
on Gold gold coins which are not sold by Banks. coins are allowed subject to a maximum
Loan (and other various restrictions) of 50 gram on per borrower basis. (All
other restrictions to be continued)
4. Assess- Loan to Value (LTV) for gold Loan to Value (LTV) for gold
ment of jewelry/ornaments/coins for period up to 12 jewelry/ornaments/coins for period up to
Loan months as follows: 12 months as follows:
amount
Purpose 22 carat Less than Purpose 22 carat 19 to 21 18
and above 22 carat & above carat carat
Agriculture 85% 65% Agricult 85% 70% 65%
MSME/ OPS/ 75% 65% ure
Others MSME/ 75% 70% 65%
OPS/
Others
Loan to Value (LTV) for gold
jewelry/ornaments/coins for period more Loan to Value (LTV) for gold
than 12 months and up to 36 months as jewelry/ornaments/coins for period more
follows: than 12 months and upto 36 months as
follows:
Purpose 22 carat Less than 22 Purpose 22 carat 19 to 21 18
and carat & above carat carat
above Agriculture 75% 70% 65%
Agriculture 75% 65% MSME/ 70% 70% 65%
MSME/ OPS/ 70% 65% OPS/Others
Others

.i• 2
 5. Processing a) Agriculture Gold Loans- All Gold Loans-
charges Limit Hallmarked Normal Gold Limit All type of Gold
Gold Jewellery/ Jewellery/ Jewellery/ Ornaments/
Ornaments/ Ornaments Gold Coins (max. 50
Gold Coins, qms)
max. 50 ems U to 1.00 lakh Nil
Upto 1.00 Nil Nil Over 1.00 lakh Rs.125/- per lakh
lakh to 5.00 lakh Max. Rs.250/-
Over 1.00 Rs.125/- per Rs.150/- per Over 5.00 lakh Rs.125/-per lakh
lakh to 5.00 lakh max. lakh max Max. Rs.1000/-
lakh Rs.250/- Rs.300/-
Over 5.00 Rs.125/- per Rs.150/- per
lakh lakh - Max. lakh Processing charges to be collected on
Rs.1000/- Max. Rs.1500/- the basis of individual limit/account.

b MSME/OPS/Consum.tion Gold Loans-

Limit allmarked Normal Gold
old Jewellery Jewellery/
rnaments/ Ornaments
old Coin
max. 50 ms
Upto 1.00 Nil Nil
lakh
Over 1.00 Rs.125/- per Rs.150/- per
lakh lakh Max. lakh Max.
Rs1500/- Rs.2000/-
Once the customer's aggregate limit crosses
Rs.1.00 lakh, then processing charges
applicable for limits above Rs.1.00 lakh are to
be collected even though the individual
limit/account is within Rs.1.00 lakh.
6 Quantum of Loan of Rs.1.00 lakh and below for Loan of Rs.2.00 lakh & below for
Loan/ Agriculture Purpose — Agriculture Purpose —
borrowers Gold Loan will be extended upto Rs.1.00 Gold Loan will be extended upto Rs.2.00
lakh by obtaining a declaration duly signed lakh by obtaining a declaration duly
by the borrower. Such small loans are signed by the borrower. Such small loans
generally required by marginal & small are generally required by marginal &
farmers, small scale tenant agriculturists, small farmers, small scale tenant
petty traders-cum-farmers in farming (or) agriculturists, petty traders-cum-farmers
processing of farm produce, those farmers in farming (or) processing of farm
tending cattle and other allied activities to produce, those farmers tending cattle
supplement their farm income, agriculturists and other allied activities to supplement
in maintaining farm land, machinery, farm their farm income, agriculturists in
houses and storage bins and other activities maintaining farm land, machinery, farm
related to farming, allied agriculture and food houses and storage bins and other
& agro processing activities. activities related to farming, allied
Branches should satisfy with the agriculture and food & agro processing
declarations given for availing gold loan. activities.
Branches are also to ensure to take Branches should satisfy with the
applications, declarations and loan declarations given for availing gold loan.
documents as proposed in this policy strictly. Branches are also to ensure to take
Needless to mention that for loans above applications, declarations and loan
Rs.1.00 lakh for crop production (wherever documents as proposed in this policy
Interest Subvention is not applied/ strictly.
applicable) copies of land revenue Needless to mention that for loans above
records/extracts, land revenue Rs.2.00 lakh for crop production
receipts/documents and cultivation details to (wherever Interest Subvention is not
be obtained. applied/ applicable), copies of land
revenue records/ extracts, land revenue
receipts/documents and cultivation
details to be obtained.

* \ 8U-K

3
18,1** 1
 Star Gold Loan Policy (Revised-2021)

"STAR GOLD LOAN SCHEME"

Part-A

Strategic Necessity of Gold Loan Portfolio under Priority Sector

• For a long time, Indian society has considered gold as a symbol of prosperity. In
India, Gold is historically and culturally tied to the concept of wealth and prosperity
and emotionally attached to the traditions. Consumer demand still remains high as
Indians believe that gold is the best option for future savings and offers best
protection against inflation. Traditionally, gold has been perceived as the safest
asset during the periods of financial and economic stress.

• India is one of the world's largest consumer of gold. Gold consumption is an integral
part of India's culture and tradition. Demand for gold in India is mainly driven by
jewellery/ornaments/coins demand rather than by investment or industrial demand.

• Public at large in India, believes investing in gold as a productive investment as the

value appreciates over a period of time. The other benefit of investment in gold is
its instant liquidity either by disposing off or by availing loan against the security of
gold in emergent circumstances.

• PSBs as well as private financial Institutions are taking advantage of this opportunity
for lending against gold in the gold loan market. Our Bank's experience for last four
decades in this business is satisfactory. Such advances are secured advances and
percentage of recovery is quite high as compared to other advances because of its
sentimental values.

• We can conserve the capital by extending Gold Loans which are zero Risk
Weighted assets. Gold loans are given for agricultural, business or consumption
purposes. In the first two cases, the loans will fall in the Basel "Regulatory Retail"
Asset Class (RW 75%) and in the third case, "Consumer Credit" (RW 125%).
Notwithstanding above, because of the sufficient margin (around 130%) available
in these A/cs, the Net Exposure is always NIL and consequently the RWA is zero.
Thus, there is no capital charge on these loans. However, branches have to classify
the Gold Loans under correct Asset classes (based on the purpose of the loan).
Zones/ branches should ensure at any point of time that LTV should not be more
than 75% (85% for Agricultural purposes only) during currency of loan through either
by repayment/margin/additional security.

4
• The farming community as well as small businessmen which are categorized under
Priority Sector also invest in gold. Out of the total domestic retail gold purchase,
South India leads in purchase of gold (40%) while Western India is the second
largest (25%) purchaser of gold followed by Northern (20%) and Eastern (15%)
India. Hence, there is a vast scope for financing against gold jewellery/ornaments/
coins. This serves twin purposes to the Bank, viz. i) it is secured and lucrative under
PSA portfolio; ii) it helps in achieving regulatory budget under Priority Sector thereby
avoiding RIDF/IBPC/PSLC. In view of the foregoing and to achieve the targets
under Priority Sector lending, we should devise suitable plan and Policy to increase
our Bank's share in gold loan market.

5
 Part-B
Eligibility and operational guidelines

Item Particulars
Implementation • The "Star Gold Loan Scheme" is implemented throughout all
of the scheme branches of the Bank. The branches, where this scheme is
not being presently implemented, should obtain prior approval
of their respective Zonal Offices.
• Zonal Offices shall implement the scheme after ensuring
provision of proper infrastructure including security and
manpower.
• NBGs shall ensure suitable mechanism put in place for the
scheme in a campaign mode to increase market share of the
Bank under Gold Loan portfolio.
• For operational and security reasons, Zonal Managers are
authorized to exclude identified branches (fraud affected/
security problems, etc.) from the purview of the scheme.
Eligibility • Any Individual/Proprietorship Firm who is the lawful owner of
Gold Jewellery/Ornaments/Coins, either singly or jointly, who
maintains KYC compliant SB/CD/CC/OD account with the
branch.
• Pawn brokers, Jewelers & Jewellery shop owners, Jewel
appraisers and their close relatives are not eligible for gold
loans.
• Loans can be granted against gold jewellery/ornaments and
gold coins. The weight of the coin(s) should not exceed 50
grams per customer/borrower.
• Loans can be granted against Hallmarked gold
jewellery/ornaments. Hallmarking of gold jewellery/
ornaments ensures the quality of gold used in the
jewellery/ornaments as to caratage, fineness and purity. So,
granting of advances against the security of such hallmarked
jewellery/ornaments is safer. Preferential treatment of
hallmarked gold jewellery/ornaments is likely to encourage
practice of hallmarking which will be in the long-term interest
of consumer, lenders and the industry. Therefore, while
considering advances against gold jewellery/ornaments may
keep in view the advantages of hallmarked gold
jewellery/ornaments.
• Gold loans may also be sanctioned to Bank's staff, including
staff posted at Zonal Offices and Head Office as well as their
spouse (provided ownership rests with them) by Branch
Managers (except for the Branch Manager's spouse) without
seeking prior sanction from Zonal Office. In case of loans to
Branch Manager or his/her spouse, the SZLCC is delegated
authority to approve such loans.

6
 • Loans to staff members/their spouses can be extended at the
same terms and conditions as applicable to other customers
availing loan against gold.
• Branches are to ensure that all KYC/ AML norms are complied
with and due diligence is done as per guidelines.
• Gold belonging to the wife as `Stridhan' - For advances
against gold belonging to the wife as `Stridhan`, wife of the
borrower should also be made a co-borrower. Waiver of this
stipulation to be considered on merit at the Zonal Manager
level.
Purpose Products based on purpose which are as under:
a. Star Gold Agriculture Multipurpose Loan (Annexure-A)
b. Star Gold Agriculture Overdraft (Annexure-B)
c. Star Gold MSME and OPS Loan (Annexure-C)
d. Star Gold MSME Overdraft (Annexure-D)
e. Star Gold Personal Loan (Annexure-E)
f. Star Gold Personal Overdraft (Annexure-F)
Details of the products are separately given in Part-G.
Gold loans will not be covered under Credit Guarantee Fund Trust
for Micro and Small Enterprises (CGTMSE) scheme and Interest
Subvention Scheme.
Turn-around- Gold loans are unique type of loans and mainly availed in
Time emergencies and urgent needs of the farmers/ customers.
Therefore, their expectations are to get (or) close the loan within
shortest possible time. We propose that branches should keep turn-
around-time not exceeding 15 -25 minutes either for extending or
redemption of loans.
The list of All agricultural activities as per RBI master circular on priority sector
activities for including crop loan, working capital needs for repairs of tractors and
which gold agri-machinery, land leveling, land bunding, repairs to well, working
loan can be capital needs of dairy, poultry, milch cattle, incidental/ working
extended capital for food & agro processing units and other recurring
under expenses related for farming and allied activities including activities
Agriculture involving backward & forward linkages that comprise preparations
for cultivation till the produce is saleable in the market.
Borrowers Borrowers covered under Debt Swap (which was circulated vide
covered under Br.Cir.No.107/14 dated 16.04.2013) can also be covered under this
Debt Swap scheme up to a limit of Rs.25,000/-.
Farmers who have taken loan from non-institutional sources and
want to come out the clutches of money lenders/non-institutional
sources.
• The credit will be provided to all farmers including tenant
cultivators and oral lessees.
• Farmers are required to satisfy the bank regarding
indebtedness from money lenders.

7
 'Assessment • Limit under gold loans is to be assessed as under:
of Loan Loan amount requested by applicant/ assessed amount on
amount declaration;
OR
Loan to Value (LTV) for gold jewelry/ornaments/coins for period up
to 12 months as follows:
Purpose 22 carat and 19 to 21 18 carat
above carat
Agriculture 85% 70% 65%
MSME/OPS/Others 75% 70% 65%

Loan to Value (LTV) for gold jewelry/ornaments/coins for period

more than 12 months and up to 36 months as follows:
Purpose 22 carat and 19 to 21 18 carat
above carat
Agriculture 75% 70% 65%
MSME/OPS/ 70% 70% 65%
Others

The LTV ratio shall be computed against the total outstanding in

the account, including accrued interest, and current value of gold
jewellery/ornaments/coins determined as given.
OR
Loan amount assessed based on scale of finance for crop
production (where interest subvention is not claimed) taking into
account all expenses incidental to the crop production, given the
place of activity at the time of considering the loan such as
escalation of costs of inputs/labour more than the bench mark
decided in scale of finance/actual amount of credit requirement for
other than crop production, as the case may be.
whichever is lower.

• Gold coins shall be treated as gold jewellery/ornaments for loan

assessment purpose (maximum 50 gms per customer).
• Loan amount to be assessed based on the price of gold uploaded
on Bank's website/Finacle system.
Valuation • For the purpose of valuation of gold, it has been decided that gold
of gold jewellery/ornaments/coins accepted as security will have to be
jewellery/ valued at the average of the closing prices of 18, 22 and 24 carat
ornaments/ gold for the preceding 30 days or current rates whichever is lower
coins (to be updated in system by BU-Rural Department on weekly basis
or intermittently in case of drastic reduction in gold rates), as
quoted by the India Bullion and Jewellers Association Ltd.
• The valuations for 19, 20 and 21 carat gold will be based upon
corresponding purity/fineness in relation to 24 carat and quoted
price of 24 carat and the same will be uploaded in Finacle system.
• We should not extend any loan against gold jewellery/ ornaments
OF /
ve" with purity below 18 carat.
J e.*
*

8
 While obtaining the Hallmarked jewellery/ornaments, their purity
•
may be taken as per Hallmark Certification but jewellery/
ornaments must be 18 carat or above.
• In Finacle system, for viewing the present applicable gold rate,
"GOLDLNRT" menu has been developed. The gold rates are
updated on weekly basis by BU-Rural Department. Branches are
advised to use the latest displayed rates while extending credit
under the scheme after deducting the appropriate margin.
Valuation of gold jewellery/ornaments/coins outside the branch
premises:
• When goldsmiths are not prepared to come to branches for
valuation, there is no objection if the Branch Manager or an officer,
authorized by him accompanies the borrower for such valuation
purposes, at the borrower's risk. What is required is proper
valuation to the satisfaction of lending authority as to the quantity
and the value of the security taken.
• Wherever appraiser/goldsmith is locally not available, approval
may be sought from the Zonal Manager for appraiser/goldsmith
from other nearby centers who can commute on 2-3 fixed days
every week to the branch for the purpose of valuation.
Payment of valuation fees in case of infructuous (unsuccessful)
advances:
• To avoid instances where goldsmiths are to be paid valuation fees
for infructuous gold advances, branches should satisfy themselves
with the proposition before proceeding with the valuation of
security. In cases where such valuation fees are debited to Branch
P/L accounts, this should be reported to the Zonal Manager.
Appraisal • The gold jewellery/ornaments/coins are to be invariably appraised
of gold by empanelled gold appraiser to determine the value and purity.
jewellery/ • An approved jewel appraiser should certify quality, gross weight,
ornaments/ net weight, etc. of the gold jewellery/ornaments/coins offered as
coins security. The weight of pearl, coral or any other stone or foreign
material other than gold contained or forming part of the
jewellery/ornaments irrespective of its value shall be deducted from
the gross weight of the jewellery/ornaments to arrive at the net
weight for calculating the eligibility for the loan. Advance should be
granted only after the Branch Manager/ sanctioning authority is
satisfied about the genuineness, quality, weight, etc., of the gold
jewellery/ornaments/coins.
• Touch stone method and/ or nitric acid test should invariably be
applied in order to ascertain the true nature of jewellery/
ornaments/coins.
• Use of Karatometers:
We authorize the Zonal Managers for purchase of Karatometers as
per the direction from the Head Office (Estate/Rural Dept.) issued
from time to time for the use of the branches after taking into
consideration all the necessary precautions. However, needless
to add, Karatometers should be used as a secondary check for
cross verification. Appraisers will continue to be engaged as

9
 before. Branches are given choice to empanel more number of
appraisers as per the size of portfolio, demand, market competition
and improvement in TAT.
• Valuation Certificate:
Branches using Karatometers should keep on record the test report
as per Annexure-I. Such test should be done by the officer-in-
charge of the department in presence of another officer/ joint
custodian. It should tally with the appraisal certificate of gold
appraiser as per Annexure-II except minor/nominal differences.
• Second Appraisal of the gold jewellery/ ornaments/ coins:
Branches with the following criteria must take second appraisal by
another appraiser. (Deputed from other branches' panel may be
considered if locally 2nd panelled appraiser is not available)
i) Per account limit of Rs. 5.00 lakh and above, where gold
loan portfolio of the branch is of Rs. 20 crore and above.
ii) As per Inspection and Audit Dept. IOM HO/I&A/SN/2017-
18/1735 dated 04.01.2018 during Risk Based Internal Audit
(RBIA) of the branch.
iii) At the time of review/renewal of OD accounts.
iv) Certificate of Revaluation duly signed by the second
appraiser to be obtained as per Annexure-Ill.
Type of Demand Loan/ Overdraft
facility
Quantum For Priority Sector and Other purposes:
of Loan/ Minimum amount of loan No minimum ceiling
borrowers Maximum amount of loan Rs.50.00 Lakh
The borrower can have multiple loan accounts but the aggregate limit
under all gold loan per borrower should not exceed Rs.50.00 Lakh.

Loan of Rs.2.00 lakh and below for Agriculture Purpose —

Gold Loan will be extended upto Rs.2.00 lakh by obtaining a declaration
duly signed by the borrower. Such small loans are generally required by
marginal & small farmers, small scale tenant agriculturists, petty traders-
cum-farmers in farming (or) processing of farm produce, those farmers
tending cattle and other allied activities to supplement their farm income,
agriculturists in maintaining farm land, machinery, farm houses and
storage bins and other activities related to farming, allied agriculture and
food & agro processing activities. Branches should satisfy with the
declarations given for availing gold loan. Branches are also to ensure to
take applications, declarations and loan documents as proposed in this
policy strictly.

Needless to mention that for loans above Rs.2.00 lakh for crop production
(wherever Interest Subvention is not applied/ applicable) copies of land
revenue records/extracts, land revenue receipts/ documents and
cultivation details to be obtained.
'61 0P

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\
10
Rate of 1A. Gold loan and Overdraft for Agriculture
Interest Applicable ROI:
Tenure Rate of Interest
Up to 12 months @ 1 year MCLR+ 0.00% (BSS)+ 0.00% (CRP)
Presently 7.25% p.a.
Above 12 months and @ 1 year MCLR+ 0.00% (BSS)+ 0.30%
upto 36 months (CRP) Presently 7.55% p.a.

1B. Gold loan and Overdraft for Food & Agro— ROI for Gold Loan under
Food & Agro activity is to be charged linking to RBLR.
Applicable ROI:

Tenure Rate of Interest

Up to 12 months @ RBLR+ 0.50% (CRP) Presently 7.35% p.a.
Above 12 months and @ RBLR+ 0.80% (CRP) Presently 7.65% p.a.
upto 36 months
2. Gold loan and Overdraft for MSME & OPS
Applicable ROI
Tenure Rate of Interest
Up to 12 months @ RBLR+ 0.80 % (CRP) Presently 7.65%
p.a.
Above 12 months and @ RBLR+ 1.30 % (CRP) Presently 8.15%
upto 36 months p.a.

3. Gold Loan for Consumption/ Non-priority Sector:

Applicable ROI:

Tenure Rate of Interest

Up to 12 months @MCLR+ 0.30% (BSS) + 0.85% (CRP)
Presently 8.40% p.a.
Above 12 months and @MCLR + 0.30% (BSS) + 1.35% (CRP)
up to 36 months I Presently 8.90% p.a.

Note: Concession of 0.10 % in applicable ROI to be given in case of

Sanctioned limits of Rs.10 Lakh and above, only if entire pledged jewellery
is Hallmark and provided that the ROI should not go below MCLR rate in
case of Agricultural accounts.

Financing against pledge of Sovereign Gold Bonds will not be covered

under this policy. It is guided by HO BC No. 111/75 Dated 01.08.2017.

11
Documenta- 1. For limits up to Rs.1.00 Lakh (Demand Loan/Over Draft)
tion documents to be obtained are as under:
• Application-cum-Valuation-cum-Sanction letter (modified in
Aug. 2017) (Annexure-IV)
• Demand Promissory Note. (Annexure-V)
• Unstamped Loan-cum-Agreement of Pledge of Gold
Jewellery/Ornaments/Coins (AG-35 revised Aug.2017)
(Annexure-VI)
• Undertaking-cum-declaration for gold loans upto Rs.2.00
lakh (as per Annexure-VII to be obtained for agriculture
purpose only).
2. For limits above Rs.1.00 Lakh (Demand Loan/Over Draft),
documents to be obtained are as under:
• Application-cum-Valuation-cum-Sanction letter (modified in
Aug. 2017) (Annexure-IV)
• Demand Promissory Note. (Annexure-V)
• Stamped Loan-cum-Agreement of Pledge of Gold
Jewellery/Ornaments/Coins (AG-35 revised Aug.2017)
(Annexure-VI)
• Undertaking-cum-declaration for gold loans, based on
sanctioned limit [as per Annexure-VII or Annexure-VII (a) to
be obtained for agriculture purpose only.] A copy of land
documents, latest land revenue receipt and cultivation
details should be obtained for crop loan purpose only (for
loans above Rs.2.00 Lakh).
Disbursement • The proceeds of the loan are to be credited to the KYC compliant
SB/CD/CC/OD account of the borrower.
• In case of overdraft facility, the borrower may be allowed to draw
from the account directly. Cheque book facility may be extended
to eligible literate borrowers in case of revolving facility.
Security Pledge of gold jewellery/ornaments/coins.
Service No documentation/ inspection charges to be levied for gold loan.
charges No prepayment charge to be levied for gold loan.
Processing a) All Gold Loans-
charges Limit All type of Gold Jewellery/ Ornaments/ Gold Coins
(max. 50 gms)
Upto 1.00 lakh Nil
Over 1.00 lakh to Rs.125/- per lakh; Max. Rs.250/-
5.00 lakh
Over 5.00 lakh Rs.125/- per lakh; Max. Rs.1000/-

Processing charges to be collected on the basis of individual

limit/account (per occasion).

12
Appraisal fees Appraisal charges of Rs.51- per Rs.1000/- of loan amount, minimum
Rs.100/- with a maximum cap of Rs.1500/- for loan upto Rs.10.00
Lakhs. For loan above Rs.10.00 Lakhs, fixed appraisal fee of
Rs.2000/- to be recovered from the borrower. Appraisal charges to be
waived for second appraisal i.e. same will be borne by the Bank,
whenever it is applicable.
NBG GM/Zonal Manager may reduce the appraisal charges based on
the volume of business, availability of appraisers and local area
practices, etc. However, it should be uniform for all branches under
NBG/Zone, as the case may be.

Repayment 1. DEMAND LOAN

Period A. Agricultural loans:-
a. Bullet Repayment: The bullet repayment of loan is allowed for
maturity up to 12 months (short term crops) and 18 months (long term
crops) based on the cropping pattern or cash flow from the agricultural
activity.
b. Non-bullet Repayment: Non-bullet repayment of loan is allowed
with monthly/quarterly/half-yearly/yearly instalments as per cash
flow/liquidity available with the borrower subject to maximum period of
36 months.
The repayment of agricultural gold loan (crop loan) should coincide
with harvesting/ marketing of crops. As regard to agricultural gold loans
other than crop loans, i.e. for agricultural and allied activities such as
dairy, fishery, piggery, poultry, bee-keeping, etc., branches should fix
due dates on the basis of liquidity/cash flow available with the
borrowers. The charging of interest should be based on harvesting/
marketing season.
B. Loans other than agriculture:-
a. Bullet Repayment: The bullet repayment of loan is allowed up to
12 months. No deviation is allowed in this stipulation by any authority.
b. Non-bullet Repayment: Non-bullet repayment of loan is allowed
on monthly basis only, subject to maximum repayment period of 36
months.
2. OVERDRAFT
All overdraft limits are repayable on demand and are subject to
renewal at yearly interval. Maintenance of prescribed minimum margin
needs to be ensured during the currency of the loan. Drawing Power
is to be realigned in running accounts at the time of renewal after fresh
appraisal of the existing gold jewellery/ornaments/coins preferably by
a panelled appraiser other than who has done immediately preceding
appraisal. Whenever, there is reduction in drawing power or prescribed
margin, either proportionate recovery is to be made or additional gold
jewellery/ornaments/coins of requisite value to be pledged, so as to
maintain the prescribed minimum margin.

13
A. Overdraft for Agriculture:
• The repayment should coincide with harvesting/ marketing of
crops. Interest to be serviced as and when applied. The account
must be brought in credit at the time of renewal [based on short
term (12 months) and long term (18 months) crops].
• The repayment of agricultural overdraft limit for other than crop
loans, i.e. for agricultural and allied activities, such as dairy,
fishery, piggery, poultry, bee-keeping, etc., are based on the
liquidity/cash flow available with the borrower, subject to annual
review. Interest to be serviced as and when applied and
outstanding to be maintained well within the limit/drawing
power/LTV ratio.
• The repayment for reducible overdraft limit should be based on
liquidity/cash flow available, with monthly/quarterly/half
yearly/yearly frequency subject to maximum repayment period of
36 months.
• As per RBI circular Ref. No. FIDD.CO.FSD.BC.No.
1785/05.02.001/2019-20, dated February 26, 2020, all
agricultural gold loans will not be eligible for Interest Subvention
(IS) and Prompt Repayment Incentive (PRI) benefits.
B. Overdraft for Other Than Agriculture:
• The overdraft for other than agriculture is repayable on demand
subject to annual review. Interest will be charged on monthly basis
Interest to be serviced as and when applied and outstanding to be
maintained well within the limit/drawing power/LTV ratio.
• For reducible overdraft limits, repayment period upto 36 months
permitted with monthly frequency only.
3. GENERAL CONDITIONS:-
• While fixing repayment schedule, branches may ensure that
anticipated exposure on due date alongwith interest accrued/
other charges does not exceed present value of pledged
jewellery/ornaments/coins.
• Gold Loan accounts should not be restructured/rescheduled.
• LTV ratio shall be computed against the total outstanding in the
account, including accrued interest and current value of gold
jewellery/ornaments/gold coins accepted as security/ collateral,
determined as per the methodology prescribed in this policy.
• The sanctioning authority may consider repayment on EMI/Non-
EMI based on cash flow/liquidity available with borrower and
accordingly interest will be applied.
• In case of overdraft accounts, the limit will be restored after fresh
appraisal of the existing gold jewellery/ornaments/coins
preferably by a panelled appraiser other than who has done
immediately preceding appraisal.

14
Delegation of Delegation of powers for sanction of loan against gold
Powers ewelie /ornaments/coins, irrespective of category:
Authority Limit
Scale-I Rs. 4.00 Lakh
Scale-II Rs.15.00 Lakh
Scale-III & above Full powers
• These are delegated powers only for the Gold loans and not to be
clubbed with other loans/limits.
• In case of leave of regular Branch Head, the Officer holding
charge of the branch will exercise delegation as per his/her scale.
• All delegation to be reckoned on per borrower basis.
Note: Gold loans may also be sanctioned to Bank's staff, including
staff posted at Zonal Offices and Head Office as well as their spouses
(provided ownership rests with them) by Branch Managers (except for
the Branch Manager's spouse) without seeking prior sanction from
Zonal Office. In case of loans to Branch Manager or his/her spouse,
the SZLCC is delegated to approve such loans.
Insurance Gold jewellery/ornaments/coins pledged with the Bank under the
scheme are covered under the General Indemnity Insurance Policy of
the Bank. As such, there is no need for obtaining a separate insurance
cover for these items. However branches should ensure that the value
of gold pledged as security is entered in the system correctly and as
per the valuation certificate given by the appraiser, (cross verified
wherever Karatometer is available) without fail.
Utilization of Business Correspondents' services to be utilized for enhancing gold
Business loan business. However, zones/ branches should note that while
Correspondent's utilizing the BCs services, the limit and scope of BCs are as per Bank's
services existing extant guidelines issued by Financial Inclusion Department
from time to time. BCs so engaged will be paid commission as per
guidelines on mobilization of new loan accounts. They can also be
utilized for serving notices and also recovery in overdue accounts as
per guidelines issued by Financial Inclusion Department, Head Office.
Asset As per the prevailing guidelines on IRAC norms.
classification
Authority to Approval of the appraiser/goldsmith is to be done by the Zonal
approve Gold Manager as the case may be including renewal.
Appraiser In respect of branches where appraiser is not locally available, they
may be allowed to avail services of approved appraiser of nearby
branches; however, approved appraiser is to be restricted to a
maximum of 3 branches to minimize risks in valuation. Zonal office
should decide such allocation.
Selection and • The appraiser should be able to spare time for the bank at
Review of mutually agreed days. A prior undertaking to this effect should
Appraiser be obtained before recommending the case of the applicants.
• There should be a clear understanding/ undertaking that there
would be no claim for employment by the appraiser whether part
time or full time at any point of time in future. The service of
appraiser is purely a matter of contract.

15
• Selection of appraiser/Goldsmith of professional competence
and integrity is very important for success of the lending
scheme. Branches should comply due diligence report of
appraiser on the prescribed proforma (Annexure-VIII) and
submit the same to their Zonal Office for approval/ renewal. The
roles of appraiser are of critical importance in implementing the
Gold Loan Scheme. Due diligence report is to be complied at
branches by at least two officers including Branch Manager.
Zonal Office may nominate suitable officer from ZO/ other
branches in case of absence of second officer. Due diligence
report for appraisers is to be compiled as per the laid down
procedures before their engagement. Branch is to carry out
reappraisal/re-validation of randomly selected gold
jewellery/ornaments/coins before the concerned customers
from an alternate appraiser to review on satisfactory
performance of original appraiser. Accordingly updation of due
diligence and review are to be done by the Zonal Office on a
biennial basis, preferably in the month of April to continue (or)
discontinue the services of gold appraiser.
• Branches may collect applications from appraiser/goldsmith
along with testimonials from persons of good social standings
known to the Bank. A due-diligence report to be obtained from
empanelled due-diligence agency. The purpose is every care
should be taken to ensure that appraiser/ goldsmith is a man of
integrity and professional competence.
• Initially, the period of engagement as a Jewel Appraiser shall
be for two years, with a clause of termination without assigning
any reason at the option of the Bank by giving a 30 days
advance notice. Performance will be reviewed on a biennial
basis. Satisfactorily performing jewel appraisers may be
allowed to continue operations for further period of two years
each at a time. The lead indicators of performance would be
satisfactory performance, no serious audit irregularities and
absence of customer complaints.
• While reviewing performance of the appraisers, spending habits
& change in liabilities and assets may be ascertained after
thorough enquiry with local residents/ village elders/ village
development officers/ village revenue officials, etc.
Performance review report to be kept on record. The
satisfactory re-appraisal/ revaluation report of randomly
selected gold jewellery/ornaments/coins from an alternate
appraiser in the presence of respective borrower-customers is
necessary for performance review of the original appraiser of
the gold jewellery/ornaments/coins.
• The appraiser should be an Indian national and permanent
resident of nearby area of the branch and well established in
his/ her area of operations/ trade/ business/ vocation.
Necessary credentials in form of proof of present business/
establishment/ work done, etc., are to be obtained.

16
 The appraiser should be an existing customer or agreed to
become a customer of our Bank.
• The appraiser should be a person with integrity and
professional competency. There should not be any adverse
market report about the appraiser or his/ her vocation.
• The appraiser should not have convicted of any criminal offence
and sentenced to a term of imprisonment in the past. The
appraiser should not have debarred from the empanelment list
of any Bank/ Financial Institution in the past due to breach of
contract/ fraud/ malpractice.
• The appraiser should be a skilled goldsmith having minimum 1
year of experience in the similar line of business. The appraiser
should have thorough knowledge and understanding of the
industry.
• The appraiser should preferably be an Income Tax Assessee.
• Credit/ financial worthiness and family circumstances of the
appraiser should be logically examined.
• The applications fulfilling the above norms may be forwarded to
respective Zonal Offices with specific comments regarding
suitability, professional competence and integrity of the
applicants. Cluster of branches may select a common
appraiser/goldsmith depending upon local conditions. However
the approved appraiser is to be restricted to maximum of 3
branches only to mitigate risk in the activity of valuation.
Approval of appraiser/goldsmith is to be done by the Zonal
Manager as the case may be. Care should be taken for full
compliance of identity of the appraiser/ goldsmith.
• The appraiser should be paid the appraisal charges as
prescribed vide para "Appraisal Fees" Appraisal charges to be
waived for second appraisal i.e. same will be borne by the Bank,
whenever it is applicable.
• The approved appraiser/goldsmith should execute an indemnity
bond in favour of the bank and also keep an interest bearing
deposit with the Branch as under:
Rural & Semi-Urban Rs.10000/-
Urban Rs.15000/-
Metropolitan Rs.25000/-
• The deposit shall not be withdrawn during the retention period
of the appraiser/goldsmith and release of the deposits may be
subject to the approval of the Zonal Manager. A draft of the
indemnity bond and guarantee which is a composite document
is given in Annexure -IX.
• The indemnity is in a letter form and should be stamped as per
State Stamp Act as an agreement provided no signature is
attested b a witness.
.49-E11,0'

17
 Delivery of Joint Custodians shall be responsible for delivery of gold
gold jewellery/ornaments/coins to the borrower. The delivery should
jewellery/ normally be ensured only after full adjustment of the loan/
ornaments/ advance to the borrower. The delivery of gold
coins to the jewellery/ornaments/coins is to be done in the presence of Joint
borrower Custodian.
When the loan amount is completely adjusted and gold
jewellery/ornaments/coins are delivered back, borrower's
discharge/ acknowledgement should be obtained on the pledge
form at required place or in the register below the sentence
"Received the gold jewellery/ornaments/coins pledged by me/
us which are complete and in order".
Delivery of gold jewellery/ornaments/coins to a third party, who
must be identified, may be made on repayment of loan only in
very exceptional circumstances and on undoubted authority of
the borrower. The letter of authority should contain an
undertaking by the borrower absolving the Bank from
responsibility in the event of dispute or loss arising from the
delivery of gold jewellery/ornaments/coins to the party named
therein. If necessary, the undertaking may be taken in the form
of indemnity bond. The receipt of third party will be taken on
the letter of authority as well as in the Gold Loan register.
The borrower should be advised separately of the delivery of
the gold jewellery/ornaments/coins to the third party and
requested to send to the Bank an acknowledgement, which
should be sent to him along with the request letter. On receipt
of the acknowledgement, necessary remarks should be made
in the Gold Loan Register. The Letter of Authority/ Indemnity
Bond and the acknowledgement, when received, should be filed
in a separate file and retained for record.
Only in exceptional circumstances, on written request of the
borrower, part delivery of gold jewellery/ornaments/coins may
be given against part repayment of the loan, provided the
advance value of the gold jewellery/ornaments/coins still in the
Bank's possession fully covers the outstanding in the account
plus margin. The borrower's acknowledgement for receipt of
gold jewellery/ornaments/coins delivered to him should be
obtained.
Delivery of • The delivery of gold jewellery/ornaments/coins pertaining to the
gold account of a deceased is subject to the settlement of death
jewellery/ claim, even if the loan is liquidated by the heirs.
ornaments/ • KYC formalities of all legal heirs/ executants of the documents
coins to the i.e. Indemnity, Affidavit, letter of disclaimer, etc., to be fulfilled to
legal heirs of avoid any wrongful delivery of gold jewellery/ornaments/coins
;aTi:the deceased or disputes at a later stage.
,--2-F-1(i rower

18
• Interest in the account of the deceased borrower should be
charged as per the contracted rate in the usual manner.
• If the legal heir/ near relatives wish to liquidate the outstanding
in the gold loan account, they can be permitted to do so by
giving them clear understanding that the gold
jewellery/ornaments/coins would be delivered to the legal heirs
on production of legal representation in the proper way only and
that the amount so deposited would not be refunded to them in
case they fail to obtain legal representation in their favour. A
letter of undertaking to this effect must be obtained and kept on
record.
■ The gold jewellery/ornaments/coins will be delivered to the legal
heirs on production of the legal representation or on completing
the Bank's formalities with regard to delivery of the gold
jewellery/ornaments/coins in lieu of the proper legal
representation. In the latter case, the person(s) liquidating the
loan account should be made to sign the letter of indemnity as
one of the sureties.
■ Pending completion of the formalities/ production of the legal
representation and delivery, the gold jewellery/ornaments/coins
should be held as safe deposit article.
■ Documents which are required to be submitted alongwith the
claim form:
i) Proof of death of the borrower;
ii) Proof of identification and proof of address of the legal heirs/
sureties as the case may be, such as Election ID card, PAN
card, Passport, etc. and proof of authority of legal heirs
wherever applicable;
iii) Indemnity/ Legal Representation wherever applicable.
iv)Looking into inquires related to deceased cases following
documents are newly devised, which are vetted by Legal
Department, Head Office. Branches are advised to use the
same while releasing pledged gold jewellery/ ornaments/
coins of deceased person.
a. Application for release of pledged gold
jewellery/ornaments/coins in gold loan account of the
deceased intestate. (Annexure X)
b. Affidavit cum indemnity in respect of release of pledged gold
jewellery/ornaments/coins of deceased person along with
receipts. (Annexure XI)
c. Receipt in respect of release of pledged gold
jewellery/ornaments/coins of deceased person. (Annexure
XII )
d. Declaration in case gold jewellery/ornaments/coins
released in favour of a Minor in respect of release of
pledged gold jewellery/ornaments/coins of deceased
person. (Annexure XIII)

19
 Authority for redemption:
The delegation for redeeming gold jewellery/ornaments/coins to the
legal heirs of the deceased borrower against suitable indemnity
irrespective of whether the succession certificate or legal
representation has been obtained or not, is as below:-
Authority (Branch Value of pledged gold jewellery/ornaments/
Head/ Committee) coins as per the latest value
Scale I NIL
Scale II Rs. 2.00 Lakh
Scale III Rs. 4.00 Lakh
Scale IV Rs.10.00 Lakh
Scale V or SZLCC Rs. 20.00 Lakh
ZLCC Rs. 30.00 Lakh
NBGLCC Full Powers

If acknowledgement is lost, pledge gold jewellery/ornaments/coins can

be returned to the borrower after obtaining "No claim letter" from the
borrower. Further, at the time of return, usual procedures for
identification of borrower shall be followed. It should be ensured that
gold jewellery/ornaments/coins are returned only to borrowers or his/
her legal heir against proper acknowledgement and only after identity
is proved beyond doubt.
If the borrower has other irregular loans/ advances or other debts due
to the Bank as a borrower or as a guarantor or in any manner, unless
and until such debts are regularized by the borrower, the gold
jewellery/ornaments/coins pledged under the gold loan will continue to
act as a security for all such debts even after liquidation of the gold
loan.

Other Branches are further advised to remain vigilant in following

Precautions circumstances-
to be taken Same type of gold jewellery/ornaments are pledged in more
number/ quantum which is unusual of any family to hold; and
Unusual size and shape of gold jewellery/ornaments which are not
generally worn by the people in the local society.
Borrower approaches for gold loan with such quantum of gold
jewellery/ornaments/coins which do not commensurate with his
status of living (or) income.

Authority for There is no specific delegation for payment of value of gold

payment in jewellery/ornaments/coins in case of burglary/theft. Our insurance
case of policy covers the same but this is taking time to settle the claim and
burglary/theft borrowers may request for payment of value of gold
jewellery/ornaments/coins pledged. We refer to HOBC No. 112/176
dated 14.03.2019, regarding Bank's compensation policy.

20
 Claims related to compensation matters to be settled in terms of
branch circular/circular letters issued from time to time on delegation
of powers on non-credit matters or/and as mentioned specifically in
relevant policy documents/circulars etc.. For the said purpose we took
the delegation related to delivery of contents related to SDV lockers
with or without legal representation as the basis and proposed the
delegation separately for Gold loans in case of payment related to
burglary/theft as part of current revised gold loan policy as indicated
by the above branch circular HOBC 112/176 dated 14.03.2019 is as
below;
Authority Delegation for Delegation for Gold Loans
SDV as per the latest value
Scale I NIL NIL *
Scale II NIL NIL *
Scale III 0.50 Lakh NIL *
Scale IV 2.00 Lakh NIL*
Scale V 5.00 Lakh 10.00 Lakh (Dy Zonal Manager and
Zonal Manager-Scale V)
Scale VI 10.00 Lakh 15.00 Lakh (Zonal Manager)
Scale VII Full Power Full Power (NBG General Manager)
* The delegation have been purposefully restricted to controlling
authority for judicious and expeditious disposal of cases.
The sanctioning authority has to ensure lodgment of insurance claim
before payment.
Skill updation Certification courses to staff officers with the sole purpose of
of staff enhancing skill development for improved monitoring and risk
mitigation in Gold Loan advances. Such courses are available with
some institutes like Indian Gold Institute (IGI), Solitaire Diamond
Institute, etc. L&D department will shortlist the institutes and courses
in consultation with BU-Rural. The course fee to be reimbursed upon
completion and production of the certificate as per extant guidelines.

21
 Part-C
Monitoring of the accounts and safe-keeping of the gold jewellery/ornaments/coins

Item Particulars
Formation of Zones will consider carving out Gold Cell within any branch premises of
Star Gold identified branch to cater exclusively for gold loans based on potential in
Loan Cells the market. These branch services can also be used, if necessary, for
(SGLC) at appraisal of gold jewellery/ornaments/coins of other nearby branches and
potential safe keeping of gold. This particular facility can be availed by those
strategic branches with following circumstances where —
centers a) Appraisers of required quality/quantity are not available.
b) Space for keeping vault is not available to store gold packets.
c) There is potential for expanding gold loans in greater volumes in
the areas of operations of these branches but for the scarcity of
human resource and/or expertise.
d) Security risk mitigation.
Accordingly Star Gold Loan Cells were set up at strategic centers with an
objective for mobilization of gold loan business and to overcome the
difficulties like non availability of appraisers, staff, infrastructure for safe
keeping of gold jewellery/ornaments/coins etc. faced by other branches
which are equidistant to the extent possible without adversely affecting
TAT. Detailed guidelines are brought out in HOBC No-112/12 dated-
23.04.2018. (Annexure XIV)
Formation of Separate credit desks at identified Growth centers/branches are
Swarnadhaara established for extending Gold Loans called as "SWARNADHAARA
Cells CELLS" with an exclusive officer named `SWARNADHAARA CELL in-
charge". Detailed guidelines are brought out in our 10M Ref No-HO/BU-
Rural/SRB/2018-19/134 dated-10.05.2018. (Annexure XV).
Restriction • While granting advance against the security of gold coins, it should be
on Gold ensured that the weight of the coin(s) does not exceed 50 grams per
Loan customer/borrower and the amount of loan to any customer against
gold jewellery/ornaments/gold coins (weighing upto 50 grams) should
be maximum upto Rs.50.00 lakh.
No advance should be granted:
• Against gold jewellery/ornaments/ coins with names inscribed of parties
other than the borrowers.
• Against gold jewellery/ornaments/ coins which are Stridhan' unless the
wife is made co-borrower.
• Against gold jewellery/ornaments with purity below 18 carat.
• Against gold bar, bullion or primary gold.
• Against gold jewellery/ornaments/ coins for speculative or hoarding
purposes.
• Against gold jewellery/ornaments/ coins for further purchase of gold
jewellery/ ornaments/coins.
• Against units of gold Exchange Traded Funds (ETF) and gold Mutual
Funds, as these products are backed by bullion/ primary gold.
0
22
 To the persons engaged in Gold business like Gold Jewellers,
Goldsmiths, Gold Valuers, etc.
Prevention • Of late, due to over-dependence on jewel appraiser by some branch
of fraudulent officials, a few incidences of frauds have emerged in the segment.
activities by Usually, dishonest jewel appraiser commits frauds by certifying
appraiser spurious or low quality jewel as authentic one. Incidence of frauds
by jewel appraiser is a recurring one and a growing problem across
the gold loan industry. Consequently, meticulous compliance of the
existing systems and procedures is critical to avert such kinds of
frauds.
• Branch should give preference to Hallmarked jewellery/ornaments
while considering advances against jewellery keeping in view the
advantages of hallmarked jewellery/ornaments. Preferential
treatment of hallmarked jewellery/ornaments is likely to encourage
practice of halimarking which will be in the long-term interest of
consumer, lenders and the industry.
• Branch Manager should be vigilant while accepting gold to prevent
fraudulent activities by unscrupulous appraisers by certifying
spurious gold ornaments/ coins as authentic or inflating valuation.
Branches should exercise caution while sanctioning loan appraised
by appraisers who are in financial difficulties as they are more prone
to such fraudulent activities.
• The Branches may engage not less than two independent
appraisers (Panel appraiser of other branches can be engaged).
No individual other than the panel appraisers should be permitted
to appraise jewels. The panel appraisers are not permitted to
delegate their duty/ responsibility to another person.
• If the loan applicant is a close relative or close acquaintance of the
appraiser, the branch official should deny the loan unless
arrangement of alternate appraiser is made. The branch officials
should make discreet enquiries to satisfy themselves about the
absence of potential conflict of interest. Unscrupulous appraisers
often engage family members and friends as proxy borrowers to
commit frauds.
• Upon appraisal of jewels, the same should be taken under custody
immediately by the Manager/ Officer-in-charge and in no
circumstances, jewels or other documents pertaining to gold loan
should be left with the custody of the panel appraiser.
• All gold loan customers should meet the Manager/ Officer-in-charge
directly before pledging the jewels. The panel appraiser should
never canvass for gold loans unless authorized in writing by the
Branch Manager. It should be ensured that in no case, customer
shall approach the appraiser directly or vice-versa.
• Due care is to be exercised on the customers who are availing gold
loan frequently and the customers introduced by the panel
appraisers. The seating arrangement of the Officer-in-charge
should be appropriate for proper supervision/ overseeing the
valuation by the bane! appraiser.

23
 • The panel appraiser should carry out the appraisal within the Bank's
premises in the presence of the borrower and branch
manager/allocated official. The services of panel appraisers on the
panel are to be utilized for the limited purpose of appraising jewels
and under no circumstances, they should be asked to attend to any
other work either incidental or connected to the sanction of gold
loans.
• The panel appraisers should be strictly utilized for the work
entrusted to them and not for any other work. The panel appraisers
are not permitted to handle cash on behalf of the customers or the
Bank. Under no circumstance, the appraiser shall be permitted to
participate/ assist in the transactions between the Bank and its
customers.
Physical • Loss of gold jewellery/ornaments/coins due to robbery/ burglary has
securities of wider implications, making servicing/ settlement of these loan
gold accounts complicated. Considering the law and order situation,
jewellery/ appropriate security arrangements should be in place to protect the
ornaments/ pledged gold in the branches.
coins • If a branch has more than 100 packets of gold jewellery/
ornaments/coins, separate safe should be provided for the purpose
of safe custody of the same.
• In case, if the accounts are less than 100, gold jewellery/
ornaments/coins should be kept in a separate shelf exclusively
provided for the purpose inside the Cash Safe and the key of this
shelf should be in the personal custody of the Branch Manager or a
designated officer. If such exclusive shelves are not adequate, all
gold jewellery/ornaments/coins should be kept in a separate safe.
• Gold safes should not be kept in the open hall but inside the safe/
strong room.
• To avoid misappropriation/ mishandling/ fraudulent practices by the
staff handling the gold loan portfolio, a periodical physical
verification of gold packets should be undertaken. A quarterly
physical counting of gold packets and a proper record of such
verification must be maintained by the branches. The visiting
officials from controlling offices should test check maintenance of
such records. It should be covered in the regular and mandatory
monthly test checks conducted in the Branch.
• The Zonal Security Officer should inspect all branches having gold
jewellery/ornaments/coins of Rs.50.00 lakh and above to satisfy on
the security aspect and safe keeping of gold jewellery/
ornaments/coins.
Joint • All gold jewellery/ornaments/coins against which advances are
custody and made should be kept under the joint custody of Branch
role of joint Manager/Designated Officer and Head Cashier/Cashier-in-
custodians charge/Officer, as the case may be.
in safe • Branches where two or more officers are posted and a separate
keeping safe is provided for safe custody of gold jewellery/ornaments/coins,
3-5,1t5.
it shall be kept under the .oint custody of two officers.
OF
r

24
• If two or more officers are not posted in the Branch and only one
officer is available due to leave/ absence of other officers and a
separate safe is provided for safe custody of gold
jewellery/ornaments/coins, an Officer and Head Cashier/ Cashier-
in-charge/Special Assistant shall be the Joint Custodians.
However, as soon as any second officer joins/ resumes duty, gold
jewellery/ornaments/coins to be kept under the joint custody of two
officers.
• If gold jewellery/ornaments/coins are kept inside the Cash Safe,
then an Officer and Head Cashier/Cashier-in-charge shall be the
joint custodians, irrespective of number of officers posted in the
Branch.
• Special types of plastic bags are available in market and are being
used by other banks. These plastic bags have an additional
advantage of verification of purity through Karatometer without
opening the seal. Similarly, these plastic bags have unique sealing
features. The seal once broken cannot be resealed again. To
facilitate verification of gold articles during audit plastic bags with
minimum two sealing facility be used. The switch over will take time
hence during the transition period existing system of cloth bags will
continue. To have uniformity NBG/Zones should finalize the type of
plastic bags. Respective NBGLCC/ZLCC to approve the prototype
after studying security, utility and other aspects. HO will also
shortlist and suggest panel of vendors for the benefit of
NBGs/Zones.
The gold jewellery/ornaments/coins along with one copy of
valuation certificate pertaining to each account should be put in
`specially designed two-sealing plastic bags with security features'
in the presence of custodian/s and the loan account number,
borrower(s) details and details of gold items to be inscribed on the
bag. Another copy of valuation certificate should be kept with the
security documents. The third copy should be handed over to the
borrower by taking acknowledgement on the remaining two copies
having received the third copy.
• Roles of Joint Custodians at the time of acceptance of gold
jewellery/ornaments/coins are as under:
■ The quantity and number of items as per the appraiser's report
and the sanction letter shall be verified.
■ The gold jewellery/ornaments/coins shall be packed in their
presence and the packet shall be sealed in their presence.
■ It should be ensured that the packing containing the gold
jewellery/ornaments/coins is deposited inside the safe.
■ Entry will be made in the safe-in and safe-out register under dual
signature.
• Roles of Joint Custodians during the safe custody of gold
jewellery/ornaments/coins are as under:
■ The packets should be periodically counted and tallied with the
balance in safe-in and safe-out register.

25
 • The officials should look for any tampering of the packets and if
found tampered, investigate thoroughly.
• All packets should be kept in the safe by arranging them in trays
as per the serial numbers or in any other convenient way so as
to locate them easily at the time of delivery of gold
jewellery/ornaments/coins to the beneficiaries on adjustment of
the loan.
Branches to verify physical stock of gold on monthly basis during test
check/surprise verification and during quarterly cash verification as per
prevailing guidelines. Any adverse findings to be reported to Zonal Offices.
Internal The Internal Auditors while conducting Branch Inspection should verify &
Audit comment on:
• Number of bags tallied with the loan outstanding
• Number of loan against gold jewellery/ornaments/coins
accounts verified (to indicate loan account numbers also)
• Any visible tampering of sealed packets or absence of sealing
procedure
• Details of missing packets, if any.
• KYC
• Appraisal Certificate.
In addition to above, random verification of contents of gold packets should
be carried out by internal auditor. In this regards HO, Inspection and Audit
Department vide their IOM Ref HO/I&A/SN/2017-18/1735 dated
04.01.2018 have advised for physical verification of the pledged gold
jewellery/ornaments/coins. The detailed guidelines to be followed are as
under:
Auditors should physically verify on a random basis, at least 10% of gold
packets of the gold loan portfolio of the branch preferably old loan
accounts and high value loans. And extant guidelines of Gold Loan policy
are to be ensured.
It is now further proposed;
a) that the appraiser other than the person who appraised the contents
of packets of Gold loans accounts under audit should be engaged,
if necessary from the nearby branch. The procedure of reappraisal
should be carried out as per extant guidelines.
b) that the borrowers should be informed well in advance to remain
present at the time of verification of gold packets by audit team.
c) that at the time of reappraisal of gold jewellery/ornaments/coins,
Karatometers should be used if available, to crosscheck purity of
the Gold jewellery/ornaments/coins apart from valuation from
appraiser engaged for the said purpose.
The Zonal Audit Offices, further, to ensure that the Branch auditors have
checked the above mentioned points in gold loan accounts and the same
are mentioned in the audit report including end-use verification.

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26
Procedure At the time of reappraisal of gold jewellery/ornaments/coins of
for opening fictitious/fraudulent accounts to crosscheck purity of the Gold
of gold Jewellery/ornaments/coins, Zone/Branch should follow the guidelines as
packets in applicable to auction process of Gold Jewellery/ornaments/coins as
case of detailed in part E of this policy. However, it is desirable to open Gold
fictitious/ packets in the presence of the borrower. In extreme case, it should be
fraudulent/ placed on record about non-availability/Non-cooperation of borrower to
overdue visit the branch and then to follow the guidelines as detailed in part E of
accounts this policy. The Gold Loan packets can be opened in overdue accounts
also to cross verify the purity of gold/ to recover our dues as described
above.
Credit Post disbursement audit shall be done as part of regular Annual Credit
Inspection Inspection to ensure that all gold loans are covered irrespective of limits.
NBGs/Zones to ensure covering of Gold Loan accounts during credit
inspection.
Maintenance A Gold Loan Register should be maintained by the branch which should
of Gold Loan contain the following particulars:
Register Gold Loan Account Number
• Name of the borrower with Father's/ Husband's Name
• Address with Telephone/ Mobile No.
• Purpose of Loan
• Net Weight of Gold (gms)
• Date of sanction
• Sanctioned loan amount
• Date of lodgement
• Gold delivered date
• Signature of borrower
• Initials of key holding officers.
Post • The borrower shall maintain LTV as detailed under Part-B -
Sanction "Assessment of Loan amount" on gold jewellery/ornaments/coins
Monitoring during currency of the loan.
• Close monitoring of market rates of gold should be ensured. If
margin is reduced due to downward fluctuation of price of gold or
upward movement of rate of interest or accrual of interest or
overdrawing/irregularity, the Branch Manager may demand
repayment or additional security to cover the minimum margin
requirements as per LTV, with one week's notice.
• Advance will be recalled, when (i) the loan is not paid on due date
or (ii) the value of the gold is less than the outstanding or (iii) the
account becomes NPA or (iv) the account continues to remain
irregular for more than 30 days after intimation of irregularity by the
Branch. If an account turns irregular, a letter should immediately
be sent to the borrower requesting him/her to deposit the overdue
amount to regularize the account. If the borrower fails to regularize
the account and it continues to be irregular, advance should be
recalled.

27
 End Use of While classifying the accounts under Priority sector, various measures in
Funds for the policy are in place. In addition to them, it is necessary to confirm the
Priority end-use of funds. There are various ways through which the end-use of
Sector funds can be verified. The branches should undertake one or more ways
to ascertain the end-use of funds for loan limits above Rs.1 Lakh (above
Rs.2 Lakh for agricultural purpose). The indicative measures include:
A. Carrying out post-sanction inspection to ascertain the end-use,
preferably within one month of the disbursement.
B. Periodical inspections, atleast once in a year to be carried out and
such reports to be kept on record.
C. Supporting documents, depending upon the purpose, to be obtained
for limits above Rs.1 Lakh (above Rs.2 Lakh for agricultural purpose).
An illustrative list is given below:
• Land records in case of Agricultural loans.
• Bills/receipts, wherever available.
• Payment to dealer/supplier through savings/current account of the
borrower(s), wherever needed.
• Obtaining admission letter from the educational institution alongwith
declaration of expenses towards education.
• Obtaining estimate towards construction/ repair of house.
• Obtaining balance sheet/ P&L statement & assessing WC
requirements in case of MSME overdraft.
• Obtaining declaration from promoter for actual/estimated turnover,
infusion of capital in business in case of shortfall, alongwith other
documents like balance sheet, CA certificate, etc.
In short, branches must ensure that the loans extended under priority
sector are for approved purposes and their end-use is continuously
monitored.
The compliance to be verified during audit process, i.e. by internal/
concurrent/ statutory auditors and through other control functions by
controlling authorities like credit ins s ections, visits by ZO officials, etc.

0 .PF I C

28
 Part-D
Reporting to controlling offices

Item Particulars
Reporting Zonal Offices should report through NBGs to Head Office:
by ZO •List of branches extending gold loans to enable HO to upload the list on
Bank's website within one week from the date of any addition/ deletion to
the existing list.
•List of approved panel appraisers with tagged branches for centralized
mapping.
•List of branches using Karatometers.
•List of Star Gold Loan Cells (SGLC) with linked branches.
•List of Swarnadhaara Cells.
Reporting by Branches to submit a quarterly report of gold loans which are reappraised
branches on account of exposure exceeding Rs.5.00 lakh per customer to ZO for
scrutiny.

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29
 Part-E
Procedure for Auction in case of default
Item Particulars
Auction of • When an advance has been recalled and repayment is still not
gold forthcoming, the Bank has the right to sell the gold
jewellery/ jewellery/ornaments/coins pledged, after giving reasonable notice to
ornaments/ the borrowers (vide Section 176 of the Indian Contract Act). If the
coins account is not put in order within the time stated in the notice, the gold
jewellery/ ornaments/ coins should be put up for auction with the prior
approval of the SZLCC/ZLCC at Zonal Office (specimen of memo in
Annexure-XVI) in accordance with the procedure described below.
• Branches are expected to act fast on recovery either through regular
recovery action (or) by auctioning process so that the LTV rate shall
not become adverse to the Bank's interest.
• If the loan is not paid on due date or the account is turned to NPA or
persistent irregularity is not rectified or shortfall in security coverage is
not replenished, a recall notice to the borrower giving 15 days time to
repay the loan should be sent (Annexure-XVII).
• there is no response even after 15 days of recall notice, another
If
notice to the borrower giving 15 days time should be sent by registered
post with acknowledgement due informing about auctioning of gold in
case of failure of adjustment of loan on the date mentioned in the
notice (Annexure-XVIII).
• The notice of demand is to be delivered to the borrower in person or
sent by post/ courier properly to the address given on the application
or to the latest address available in the record. The postal
acknowledgement of the notice and the postal cover if returned
undelivered should be carefully preserved unopened.
• If the loan is not paid on a demand notice being made, the gold
jewellery/ornaments/coins pledged will be sold in public auction. The
Bank shall have right to recover from the borrower the balance due if
any, after sale of the pledged gold.
• Before starting the auctioning process, inventory of gold
jewellery/ornaments/coins have to be listed out before an advocate
with his acknowledgement and to be tallied with valuation certificate in
physical count of gold jewellery/ornaments/coins. Then the gold
jewellery/ornaments/coins have to be reappraised with latest market
prices by the panelled appraiser other than who appraised them earlier
at the time of sanction of loan for true reflection of correct assessment.
• The list of defaulters of overdue/ irregular gold loan accounts who have
not responded even to registered notice is to be sent to the Zonal
Office giving particulars like name and address of borrower, loan
account number, date and amount of loan sanctioned, net weight of
gold jewellery/ornaments/coins, loan outstanding, action taken, etc.,
for seeking permission for auctioning of the gold pledged by the
defaulters.
• Conduct of the auction proceedings shall be announced through
advertisement in two newspapers — one in vernacular and the second
in a national daily at least 15 calendar days before the scheduled

30
 auction date informing the date, time and place of auction and relevant
sites of National Informatics Centre by the Zonal Office. The list of
accounts taken up for auction shall be displayed at the concerned
branch for at least 15 calendar days before scheduled date of auction.
Sale notice is to be sent to the borrower informing time and venue of
auction of gold jewellery/ornaments/coins. (Annexure-XIX).
• Gold jewellery/ornaments/coins have to be auctioned in the presence
of gold appraiser and two good witnesses of that locality and shall be
taken up on as-is-where-is basis as far as possible. The auction should
be conducted in the same town or taluka in which the branch that has
extended the loan is located.
• The gold jewellery/ornaments/coins pertaining to different gold loan
accounts should be auctioned separately. Reasonable opportunity
should be given to all borrowers to redeem the gold
jewellery/ornaments/coins to avoid auction of the gold.
• Care should be taken that bid amount should not be less than the
amount to be recovered as per the account, publication charges and
tax on auction (as per applicable rules) etc. Every effort should be
made to realize the full market value of the security pledged. A
reasonable minimum reserve price must be fixed for each ornament/
coin depending on the appraiser's report and the current market price
and the bidding must start from this amount. While auctioning the gold,
the branches should declare a reserve price for the pledged gold
jewellery/ornaments/coins. The reserve price for the pledged gold
jewellery/ornaments/coins should not be less than 85% of the previous
30 days average closing price of 22 carat gold (24 carat for coins) as
available in the Bank's site and value of the gold
jewellery/ornaments/coins of lower purity, if found in terms of carats
should be proportionately reduced.
• After appropriating the auction amount to the loan account and after
meeting all related expenses, if any balance is left, it should be
refunded to the borrower by way of a Pay Order/ Demand Draft/ Credit
in the account, provided the Bank is not having any other claim against
the borrower. Full details of the value fetched in the auction, the
outstanding dues and associated cost adjusted and any amount over
and above the loan outstanding should be payable to the borrower
shall be reported to the borrower.
• A brief summary of the circumstances leading to the sale, details of
the auction proceedings, the name of the highest bidder, the amount
realized and the manner in which it has been disposed off, should be
recorded in duplicate and witnessed by as many of the disinterested
persons present at the auction as possible. A copy of the recorded
note should be forwarded to the Controlling Authority for information.
• A receipt for the sold gold jewellery/ornaments/coins should be
obtained from the successful bidder in the Gold Loan Register and also
on a separate sheet of paper and preserved alongwith other
documents/ papers of the account.
• Possibility of e-auctioning of gold jewellery/ornaments/coins to be
explored within the leaal framework.
7

31
 Part —F

List of declarations, documents and undertaking

Sr. Name of the declaration, document and undertaking Annexure

No.
1 Valuation Report (valuation done through Gold Analyzer Annexure I
Machine)
2 Valuation Certificate by appraiser Annexure II
3 Certificate of Revaluation Annexure III
4 Application-cum-Valuation-cum-Sanction letter Annexure IV
5 Demand Promissory Note Annexure V
6 Loan-cum-Agreement of Pledge of Gold Annexure VI
jewellery/ornaments/coins (AG-35 revised August 2017)
7 Undertaking-cum-Declaration for gold loans upto Rs.2.00 Annexure VII
lakh for agriculture purpose
8 Undertaking-cum-Declaration for gold loans above Annexure VII(a)
Rs.2.00 lakh for agriculture purpose
9 Due Diligence report of Jewel Appraiser Annexure VIII
10 Indemnity Letter Annexure IX
11 Application for Release of Pledged gold jewellery/ Annexure X
ornaments/ coins in Gold Loan Account of the deceased
intestate.
12 Affidavit-cum-Indemnity in respect of release of pledged Annexure XI
Gold jewellery/ornaments/coins of deceased person
13 Receipt in respect of release of pledged gold Annexure XII
jewellery/ornaments/coins of deceased person
14 Declaration in case gold jewellery/ornaments/coins Annexure XIII
released in favour of a Minor in respect of release of
pledged gold jewellery/ornaments/coins of deceased
person
15 Operational/ functional guidelines for Star Gold Loan Cells Annexure XIV
(SGLC).
16 Operational/ functional guidelines for Swarnadhaara Cell Annexure XV
17 Memorandum proposing sale / auction of gold Annexure XVI
jewellery/ornaments/coins
18 Recall Notice to the borrower Annexure XVII
19 Auction Notice to the borrower Annexure XVIII
20 Sale Notice to the borrower Annexure XIX
21 Notice for Public Auction Annexure XX
22 Suggested Strategies for popularizing Agricultural gold Annexure XXI
'f. loan

32
 ANNEXURE-I
BANK OF INDIA
BRANCH

Shri/Smt.
S.0/ W.0

Address:

Valuation done through Gold purity analyzer machine (wherever available)

Sr. Description of gold Gross % of Net Current Current Remarks

jewellery/ornaments weight purity weight Rate value
(in in (in per (Rs)
/coins
grams) carats grams) gram (5x6)
(Rs)
2 5 6

We have weighed and tested the gold jewellery/ornaments/coins by the gold purity
analyzer machine in the presence of the applicant/ borrower/gold appraiser.

Signature of Officer Signature of Credit Officer/ Br. Manager

Date:

The gold jewellery/ornaments/coins are weighed and tested in the gold purity analyzer
machine in my presence and I have agreed to the contents stated above.

Applicant's/ Borrower's signature

33
 ANNEXURE-II

The Branch Manager,

Bank of India,
Branch

Sir,
The details as to purity, weight and value of various gold jewellery/ornaments
/coins provided by Shri/Smt.
S.0./W.O.
Address:
For valuation as under:
Sr. Description of gold Gross % of Net Current Current Remarks
jewellery/ornaments weight purity weight Rate value
/coins (in in (in per (Rs)
grams) carats grams) gram (5x6)
(Rs)
1 2 3 4 5 6 7 8

I, Shri hereby state that the detailed as

certified above are correct to the best of my knowledge and belief. In the event of any
inconsistency in my certificate as above and due to which if Bank suffers/incurs any loss,
the same will be reimbursed by me to the bank without any demur and condition(s).

Date: Signature of approved appraiser/goldsmith

I, Shri have read and agreed to the

contents of the above certificate.

Date: Applicant's Signature

Countersigned by the Branch Manager/Credit Manager

(Valuation certificate to be prepared in triplicate — one copy to be kept with the ornament
bag, one with the loan documents and one copy to be given to the borrower).

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34
 ANNEXURE-HI

BANK OF INDIA
BRANCH

CERTIFICATE OF REVALUATION

Ref. No.: Date:

This is to certify that we have got re-appraised and revalued the securities obtained while
sanctioning loans mentioned below under Gold Loan Scheme from the Branch through
Shri , Gold Appraiser of Branch.

These securities have been originally valued by Shri , Gold

Appraiser of our Branch.

Sr. No. Particulars Number

1 Total number of gold loans existing as on date of
re-verification
2 Of item (1), number of accounts randomly
selected @10%
3 Total number of irregular/ suspicious gold loans
existing as on date for re-verification
4 Of item (3), number of accounts randomly
selected @10%
5 Total number of accounts selected for re-
verification (item 2 + item 4)
6 Name of the officer involved in random selection,
other than the Branch Manager
7 Details of the outcome of re-verification and action taken on findings:

Branch Manager Credit Manager

ote: The re-verification reports should be held on record.

0620. 9f bib

35
 ANNEXURE-IV
(Modified in Aug. 2017)
APPLICATION-CUM-VALUATION-CUM-SANCTION LETTER FOR GOLD LOAN
The Manager,
BANK OF INDIA, Branch
Dear Sir,
Re: Request for grant of Loan against Pledge of Gold Jewellery/ Ornaments/Coins
I/We having read and understood the terms and conditions of the captioned Loan Scheme
and agreeing to unconditionally abide by the same, request you to grant me/us a Loan of
Rs (Rupees only) for the purpose of
on the security of Pledge of the Gold Jewellery/
Ornaments/Coins as mentioned below:-
1. Description of the Gold Jewellery/Ornaments/Coins
Particulars Gross Net Fineness Valuation Total Current
Weight Weight / Purity Rate per Value (Rs)
(in gram) (in gram) (in Carat) gram (Rs)

Total

2. Details of Borrower/s:
Name of the Age Addresses Signatures/ Thumb
Borrower(s) with (Both Residence & Office) Impressions
Father's Name & Mobile Numbers

3. If the Loan is for agricultural purpose, details of agricultural property:

4. The Loan Account is to be opened in my /our name. The proceeds of the Loan may be
credited to my/our SB/CD/ Account no with you/your Branch. All applicable charges
shall be paid by me/us and the Bank shall also be within its right to recover the same by debit to
my/our account/s with the Bank.
5. We irrevocably agree and authorize the Bank to deliver the Pledged Goods to Either of us/
Any one of us upon repayment of the dues to you and redemption of the Pledged Goods.
6. The contents have been read over and translated into (mention
the name of the language) and explained to me/us and I/We having understood the same execute
these presents.
Executed at on
Yours faithfully,

(Signature of the Borrower/s)

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