Auction Policy
Sai Gold OGL treats auction as a last resort. Our Gold Loan Auction Policy ensures every borrower receives adequate notice, multiple opportunities to redeem their pledged ornaments, and complete transparency throughout the entire auction process.
Our Approach to Gold Auction: Transparent, Fair, and Customer First
At Sai Gold OGL, we understand that gold ornaments are more than financial assets; they carry deep sentimental and personal value for our customers and their families. Our Auction Policy reflects this understanding. While auctioning pledged gold is a last resort when repayments remain overdue, we prioritise giving customers every possible opportunity to redeem their ornaments before any auction.
This policy has been framed in accordance with the Reserve Bank of India’s Guidelines on Fair Practices Code and is duly approved by the Board of Directors of Sai Gold OGL.
What is a Gold Auction?
A gold auction, as defined under this policy, refers to the public sale, including online (e-auction), of gold ornaments pledged as security against a loan when a borrower fails to repay dues within the agreed tenure.
Gold loans at Sai Gold OGL are sanctioned as demand loans for a maximum tenure of 12 months (or as specified from time to time). If the loan is not repaid by the due date, the pledged ornaments become liable for auction to recover outstanding dues. Any surplus realised from the auction, after adjusting all dues, is refunded to the borrower within 30 days.
Borrowers retain the right to redeem their pledged ornaments right up to the working day before the scheduled auction date. In branch auctions, borrowers may also participate as bidders.
When is an Auction Triggered?
In the Normal Course
An auction will be initiated under the following standard circumstances:
- When the loan remains unpaid beyond the due date as per the sanctioned tenure.
- In EMI-based loans, when there is a default of 3 or more EMIs.
- In cases where part payments were received and the auction was previously postponed at the borrower’s request, typically two months after the loan due date (for example, after 14 months for a 12-month scheme).
In Special Circumstances
1. Fall in Gold Prices (Depletion in Security Value)
If a significant drop in gold prices causes the value of pledged ornaments to fall below the outstanding loan amount, Sai Gold OGL may demand that the borrower either repay a portion of the principal, pledge additional gold, or close the loan. If the borrower does not comply within 14 days, auction proceedings may be initiated even before the loan’s scheduled due date.
2. Spurious or Low-Quality Gold
If gold ornaments are found to be of substandard purity, either during a routine audit or at the auction centre, they may be considered for auction before the loan’s due date. Before any action is taken:
- The purity of the ornaments is re-verified internally by a competent officer or auditor.
- A melt test (assaying) may be conducted for further confirmation.
- An auction notice is sent to the borrower, giving them an opportunity to verify and redeem their ornaments.
- If the borrower fails to act, newspaper advertisements are published specifying the date, time, and place of the auction, providing additional time to regularise the account.
The reserve price for low-quality ornaments is fixed based on the reconfirmed purity and applicable RBI guidelines.
3. Any Other Contingency
If an auction is required for any other reason where a potential loss is anticipated, Sai Gold OGL will follow standard auction procedures, including sending registered notices and publishing newspaper advertisements, before proceeding.
Our Commitment to Avoiding Auction
Sai Gold OGL makes every sincere effort to help customers avoid auction. We proactively communicate with borrowers through periodic reminders, encouraging them to:
- Pay interest regularly to keep their loan account active.
- Release their pledged ornaments by settling all dues before the due date.
- Renew their loan by paying up-to-date interest and adjusting for any change in the Loan-to-Value (LTV) ratio.
Auction Notice and Intimation
Before any auction takes place, Sai Gold OGL ensures borrowers are given adequate notice and opportunity to act:
- A registered auction notice is sent to the borrower at least 14 days before the scheduled auction date, clearly stating the amount due, auction date and time, location, and the last date by which dues can be paid.
- A public advertisement is published in a local vernacular daily and a national English daily, specifying the place, date, and time of the auction.
- Borrowers may redeem their ornaments up to the close of business on the day before the auction.
- If the auction is postponed for any reason, a fresh intimation is sent to the borrower.
Exemptions and Postponements
Sai Gold OGL recognises that unforeseen circumstances can affect a borrower’s ability to repay. Accounts may be considered for exemption from or postponement of a scheduled auction in the following situations:
- The borrower makes a part payment, demonstrating intent to redeem.
- The borrower submits a specific request for postponement.
- Legal issues are pending, such as a police case or court order.
- In genuine cases of hardship, the company may, at its discretion, grant additional time, considering the sentimental value of the ornaments, even if the borrower is unable to make an immediate part payment.
Accounts under police or court orders preventing auction will not be auctioned until such restrictions are lifted.
Part Payments
Part payments towards principal or interest are accepted at any time up to the loan closure due date. After the due date, part payments may be accepted subject to applicable discretionary guidelines. However, please note that making a part payment alone does not automatically entitle a borrower to postponement of the auction. All dues must be cleared to avoid auction proceedings.
The Auction Process
Physical (Branch) Auction
Auctions are conducted through an open bidding process at the branch from which the loan was originally availed. This gives borrowers a final opportunity to participate or redeem their ornaments on the day itself. Key steps include:
- A minimum of 3 bidders must be present for the auction to proceed.
- Bidders must submit valid ID proof, a PAN card copy, and GST registration, along with the required Earnest Money Deposit (EMD).
- Bids are recorded in a bid register, and the highest bidder (H-1) is declared the successful bidder.
- The successful bidder is given up to 14 days to remit the full amount and collect the gold, with a possible extension of 7 days at the discretion of the authorised officer.
- If the highest bidder defaults, the bid is offered to subsequent bidders in descending order of their quoted price.
- If no bidder confirms, the auction is cancelled and a fresh auction is initiated with full compliance of all notice procedures.
Online Auction (E-Auction)
In addition to physical auctions, Sai Gold OGL also conducts auctions through reputed online platforms. The e-auction process ensures:
- All statutory regulations and RBI guidelines on minimum bid price are strictly followed.
- Auction date and time are announced a minimum of 14 days in advance.
- Gold is offered for sale in appropriate lots, with the minimum expected price clearly specified.
- All auction-related documents are accessible digitally.
- In case of any postponement, updated details are displayed at the branch and on the website.
Minimum Bid Price (Reserve Price)
The minimum bid price for each auction lot is determined based on:
- The prevailing market price of gold as published by the Indian Bullion and Jewellers Association Ltd (IBJA).
- The total outstanding dues in the loan account, including principal, interest, and applicable charges.
- The general purity and quality of the gold ornaments.
In all cases, the reserve price will not be less than 85% of the previous 30-day average closing price of 22-carat gold as declared by IBJA. For ornaments of lower purity, the floor price is proportionately reduced.
If bidders are found to be colluding or forming a cartel to manipulate the bidding process, Sai Gold OGL reserves the right to cancel and reschedule the auction.
Refund of Auction Surplus
- All surplus amounts are held in a dedicated Escrow Account upon receipt of auction proceeds.
- Surplus is transferred to the borrower’s bank account via NEFT/RTGS within 30 days of receipt of proceeds.
- Where bank account details are unavailable, digital payment platforms (such as GPay, PhonePe, or Paytm) are used.
- Cash refunds of up to ₹5,000 may be made in person at the branch with proper documentation.
- For amounts above ₹5,000 where bank details are unavailable, account details are collected from the customer and the amount is transferred directly.
- Surplus may also be credited to the borrower’s active gold loan account with prior intimation.
- If no payment method is available, a Demand Draft is sent by registered post to the borrower’s last known address.
Refund of Earnest Money Deposit (EMD)
- Successful bidders: EMD is refunded within 10 days of remittance of the full bid amount.
- Unsuccessful bidders: EMD is refunded within 10 days from the date of auction.
Re-Auction
If an auction is unsuccessful due to an insufficient number of bidders or no bids meeting the reserve price, a re auction is scheduled. The auctioneer must document in writing the reason for the unsuccessful auction. All standard auction procedures, including fresh notices and newspaper advertisements, are followed before conducting the re-auction.
Record-Keeping and Disclosures
Sai Gold OGL maintains comprehensive records of all auction proceedings, including:
- Registered notice postal receipts and acknowledgements.
- Copies of newspaper auction advertisements.
- Details of all auction participants and bid prices.
- Sales invoices and detailed auction records, authenticated by the Board-approved auctioneer.
Post-auction, every borrower is informed of the price fetched, the dues adjusted, and any surplus or shortfall amount. Annual reports disclose aggregate auction details including the number of accounts, outstanding amounts, and values realised.
Auction of Assets Other Than Gold
In the rare event that Sai Gold OGL needs to auction non gold assets to recover dues, all applicable legal processes, including filing of suits, obtaining possession through court decree, and conducting a lawful public auction, will be strictly followed.
Auction Policy Review
This Auction Policy is reviewed annually by the Board of Directors to ensure it remains aligned with regulatory requirements and the evolving needs of our customers.
For any queries or clarifications regarding the auction of your pledged ornaments, please contact your nearest Sai Gold OGL branch or reach out to our customer support team. We are here to help you find the best possible resolution.