RBI on Verification of Ownership of Gold

RBI has clarified that the verification of ownership of gold with the borrower need not necessarily be through original receipts for the jewellery pledged – instead, a suitable document may be prepared to explain how the ownership was determined, particularly in each and every case where the gold jewellery pledged by a borrower at any one time or cumulatively on loan outstanding is more than 20 grams. RBI has also clarified that the need to give a certificate on the purity of gold to the borrower at the time of sanctioning of the gold loan cannot be dispensed with. The certified purity shall be applied for determining the maximum permissible loan and the reserve price for auction.

Further, the NBFCs were directed to conduct the auction for selling off gold (in cases where due notice had been given demanding repayment of loan taken against gold and where payment had not been forthcoming) in the same town or taluk in which the branch that had extended the loan is located.