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Representative image | Photo: AFP
Thiruvananthapuram: The Department of Cooperation has issued a fresh set of guidelines for cooperative banks and societies to auction pledged gold. The cooperative society registrar’s decision came after noticing serious issues in the sector.
Intermediaries collude to ensure that the gold does not cost more than the loan amount, the registrar was informed. If the auction gains more than the loan amount, the borrower is entitled to get it.
The provisions in the new guidelines give permission for emergency auctions when the loan matures or the gold rate falls. Participation of at least three people required. Bank or society employees should not take part in the auction.
A notice should be issued to the borrower 14 days prior to the auction. The guidelines state that if the borrower pays back half of the due amount after receiving the notice and asks for 30 days to pay back the rest, the bank should allow it.
The auction price should not be less than 85 per cent of the 30-day average market rate. If an amount higher than the loan amount is received during the auction, the excess amount should be handed over to the borrower within seven days.
However, if the auction amount is lesser than the loan amount, then steps should be taken for confiscation to retrieve the remaining amount.
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