ADVANCES AGAINST SECURITY OF GOLD ORNAMENTS … · Jewel Loan on the security of Gold coins sold by...

ANDHRA PRAGATHI GRAMEENA BANK HEAD OFFICE :: KADAPA

Circular No.129-2010-BC-CD Date:03.06.10

ADVANCES AGAINST SECURITY OF GOLD ORNAMENTS – COMPREHENSIVE GUIDELINES

Attention of Branches and Regional Offices is invited to the captioned subject. The Bank had earlier issued guidelines on granting of loans under various Jewel Loan schemes and the level of advances under Jewel loan portfolio is on increase every year. With a view to make available various guidelines applicable to different types of Jewel Loan schemes, appointment of Jewel Appraisers, auctioning of jewels etc., to Branches/Regional Offices at one place, it is felt necessary to issue comprehensive guidelines covering all the aspects relating to Jewel loan schemes as under.

1. BROAD CLASSIFICATION:

Advances against the security of gold ornaments including gold coins are classified under the following heads.

(A) Pragathi Agri Gold Loan scheme {JL (Ag.)}

(B) Pragathi General Gold Loan scheme {JL (Gen.)}

(C) Pragathi Swarna Credit Card scheme.

(D) Staff Jewel Loan scheme as applicable to public {JL (staff)}

2. ELIGIBILITY

(A) Jewel loans shall be sanctioned to the customers, whose SB / Current

accounts are opened as per KYC norms.

(B) Jewel loans shall be sanctioned only by those Branches which are

having the services of approved Jewel Appraiser.

(C) The applicant seeking Jewel Loan for agricultural purpose should be an

agriculturist, cultivating the lands. Such loans shall be classified under

“Pragathi Agri Gold Loan scheme {JL (Ag.)} Priority Sector”.

(D) The applicant seeking Jewel loan for other than agricultural purpose

should specifically mention the purpose of the loan in the loan

application. Such loans shall be classified under “Pragathi General

Gold Loan scheme {JL(Gen.)} / Swarna Credit Card scheme – Non

Priority Sector”.

(D) Jewel loans can be sanctioned to confirmed Officers and Employees

of the Bank as per the eligibility under the scheme. Such loans shall

be classified under “Jewel Loan (Staff) – Non-Priority Sector”.

Jewel Loans should not be sanctioned for speculative purposes.

Contd….2


: 2 :

3. LOAN LIMIT

(A) The loan/limit shall be fixed keeping in view the scale of finance(for crop production purpose), purpose of the loan(for other purposes), weight and purity of the gold, per gram lending rate/margin applicable to different types of jewel loan loan schemes as communicated by the Head Office from time to time.

(B) The maximum amount of the loan that can be sanctioned to staff members under Staff Jewel loan scheme of the Bank is Rs.25000/- The per gram lending rate as applicable to JL(Gen.)shall be adopted while sanctioning Staff Jewel loans. (C) The loan/limit sanctioned shall be within the discretionary powers of the Sanctioning Authority as communicated by the Head Office from time to time

4. SECURITY

(A) The loan shall be arranged against the security of gold ornaments / gold coins of adequate value as per the norms in force from time to time.

(B) No other security including the asset created out of the proceeds of Jewel Loan need be insisted.

5. RATE OF INTEREST

The rate of interest shall be as stipulated from time-to-time on respective Jewel

loan schemes.

The rate of interest on staff Jewel loans shall be as applicable to public on

Jewel loans (Gen.) and compounded on monthly basis.

6. REPAYMENT

A) Jewel loans (Ag.)

As applicable to PKCC scheme.

B) Jewel loans (Gen.)

The principal along with interest shall be repayable in 2 years from the date

of arranging the loan. Interest shall be compounded on monthly basis.

C) Pragathi Swarna Credit Card:

Valid for 2 years from the date of arranging the facility. Interest shall be

compounded on monthly basis.

D) Staff Jewel Loans:

The loan together with interest thereon shall be repayable in not more than

36 Equated Monthly Instalments and the loan instalment shall be recovered from the salary every month.

Contd….3


: 3 :

7. SANCTIONING POWERS

The per party sanctioning powers communicated from time to time shall be

strictly adhered to.

The present per party sanctioning powers of the Branch Managers for

sanction of all types of Jewel loans put together as per circular No.41-2010-

BC-CD dt.09.02.2010 are as under. (Rs. in lakhs)

Branch Managers

SCALE III SCALE II SCALE I

3.00 3.00 2.00

The Jewel loans sanctioned to a party under different types of Jewel loans

put together shall not exceed the per party sanctioning powers communicat-

ed from time to time.

Sanctioning of too many Jewel loans to a single party shall be discouraged

so as to avoid incidence of frauds.

Wherever, more than one Jewel loan is sanctioned to a single party, liability register shall be maintained / so as to ensure that the per party limit is not

exceeded.

Branch Manager is the Sanctioning Authority for sanctioning staff Jewel loans upto Rs.25000/-under the scheme.

8. GENERAL GUIDELINES

The general guidelines applicable to all types of Jewel loans are as follows:

Whom to Advance:

Jewel loans should be arranged only to the customers of the Bank who are

having SB / Current A/c with the Branch and are properly introduced by

following KYC norms.

(A) Loans to Jewel Appraiser or his relatives:

No Jewel loan shall be sanctioned to Bank's Jewel Appraiser or to his relatives or to persons introduced by him, unless the jewels proposed to be pledged are independently appraised by other approved Jewel Appraiser under information to Regional Office.

(C) Satisfying as to the Ownership:

The Branch Manager shall satisfy himself that the party pledging the

jewels is the true owner of the jewels. Some of the illustrative check points

are furnished below: Contd….4

Circular No.129-2010-BC-CD Date:03.06.10 : 4 :

i) If the general appearance of the borrower is quite incompatible with the

value or type of the jewels brought, eg., a man looking poor bringing

jewels of considerable value should raise suspicion.

ii) If the jewels worn generally by a particular community are brought for

pledging by persons of another community eg. jewels worn by Muslims

are brought by Hindus and vice versa.

iii) Temple Jewels are being brought by individuals for pledging.

iv) Ornaments on which names of persons other than those of the borrower

are inscribed shall not be accepted for pledge.

v) When the behaviour of the borrower is suspicious.

vi) When the borrower objects to a thorough examination of the jewels.

vii) When the borrower is a temporary immigrant.

9. APPRAISAL OF JEWELS

(A) When the head of the branch is satisfied regarding the ownership of

jewels, he / she shall get the jewels appraised by the Jewel Appraiser

appointed by the Bank.

(B) Appraisal by the Jewel Appraiser:

The jewels should be got appraised and all purity tests such as touch stone

test, acid test etc. should be done by the Jewel Appraiser in the presence of

the Manager in the branch premises itself and under no circumstances, the

jewels should be sent to the Jewel Appraiser's place for appraising, for the

purpose of granting Jewel loans.

(C) Whenever the appointed Jewel Appraiser is out of station:

Whenever the appointed Jewel Appraiser is out of station, the jewels may be

got appraised by the appointed Jewel Appraiser of nearby Branch.

(D) Appraisal Procedure:

It is not possible to lay down any fool-proof method of testing the genuineness

of gold and gold ornaments and this skill shall have to be developed by

constant practice and experience. Broad guidelines, however, are indicated

below for guidance.

i) Touchstone Test:

Gold/ornaments shall be rubbed on a touchstone. The gloss and colour of

gold are distinct from those of their base or alloy metals and should, by

experience, be noticed. Rubbing on the touchstone will also disclose any

spurious substance inside, if the ornaments are merely coated with gold

lining/plating.

Contd….5


: 5 :

ii) Nitric Acid Test:

Nitric Acid does not make any impression on pure gold. Its effect on

sovereign gold is very little; but on gold of inferior quality, its reaction is

discoloration of the metal to coppery red. The extent of discoloration

depends on the proportion of the alloy. The discoloration will vary

according to the metal used for the alloy. A drop of nitric acid, from the

bottle container by a glass rod or tube put on the touchstone on which

gold ornament is rubbed, or even on the ornament itself will disclose the

genuineness or otherwise of the gold content of the ornaments.

iii) Test by Filing:

In the case of jewels coated with a thick lining of gold, application of

a triangular file or a small deep scratch created by a pen knife will

expose the inner contents. The particles of the alloy will be seen

spilling out of the cavity so created. Nitric acid test described above

should then be applied on the cavity.

Touch stone at a cost upto Rs.200/- and Nitric acid at reasonable

rate can be purchased by Branches exclusively for their use and

the expenditure can be debited to General Charges - Contingencies

a/c. The Nitric Acid shall be changed once in 2 months.

iv) Items to be excluded during appraisal:

i) Precious Stones: Indian ornaments, often contain precious stones.

In several instances, such stones fetch more value than gold. But as

a matter of policy, all types of precious stones should be ignored

when advancing against jewels. Sufficient margin should therefore be

allowed for the approximate weight of such stones, and for the

purpose of advance, only net weight so arrived at should be computed.

ii) Jewels containing Thread: Similarly, some jewels contain thread,

made of cotton silk and of even other base metals like copper or

silver. In such cases, too, adequate margin should be allowed so that

the approximate weight of such extraneous substance is ignored.

Advances against jewels should be discouraged where such

extraneous substance is out of proportion to the gold used.

(F) Examination of Purity:

The Jewel Appraiser and the Branch Manager or the authorised officer

shall examine the purity to their satisfaction.

Contd….6


: 6 :

(G) Loans against the pledge of Gold coins sold by Banks

Jewel Loan on the security of Gold coins sold by Banks can be arranged by Branches to meet genuine credit requirements, on similar terms & conditions, as in the case of JLs against gold ornaments/ jewelleries. Branches may refer to HO Circular No.182-2009-BC-CD dt.07.08.2009.

10. OTHER ASPECTS

A) Per gram lending rate & Margin:

As stipulated from time to time.

B) Certification:

All the particulars required viz., item wise(not total) details of the

ornaments, gross weight, net weight, purity, per gram estimated value

are to be entered and filled up by the Jewel Appraiser in the appropriate

place in Jewel Appraiser’s certificate and the Jewel Appraiser should sign

at the place allotted for his signature.

C) Scrutiny of Appraiser's Certification:

i) When the Jewel Appraiser’s certificate is received with the signature

of Jewel Appraiser, the Head of the branch should verify his signature

and ensure that the Jewel Appraiser has given all the particulars

completely,

ii) The Head of the branch should verify and satisfy himself that

the valuation made is fair and that the gross weight, net weight and

purity certified by the Jewel Appraiser are found in order.

D) Jewel Appraisers shall not be allowed to fill the Jewel loan application forms

except the Jewel Appraiser’s certificate and they shall not be allowed to

make entries in the Jewel loan ledger also.

E) Branch Managers shall receive the gold ornaments from the Jewel Appraiser

immediately after appraisal of the Jewels pertaining to a customer is completed

and not in a bunch at the end of the day.

F) While renewing the Jewel loans, Jewels shall be appraised again invariably

though these Jewels were appraised earlier.

G) The Regional Offices shall arrange for re-verification of jewels pledged in all the

branches in the Region every year by the Jewel Appraiser of other Branches

during the months of April and May , obtain a certificate duly signed by the

Custodian, Joint Custodian and the Branch Manager with regard to purity,

weight etc., from all branches and submit a consolidated certificate of the

Regional Office to the Head Office.

Contd….7


: 7 :

11. SANCTION OF ADVANCE

(A) The head of branch will determine the amount to be advanced taking into consideration the purpose of the loan, gross weight and net weight of the gold ornaments, its purity, scale of finance (for crop production), per gram lending rate of the gold, per party sanctioning powers as communicated from time to time etc., and pass sanctioning orders in ADN-9 under his signature and date.

(B) Before sanctioning the loan, the head of the branch should satisfy

himself / herself that the advance is not for speculative purposes. (C) In all cases margin prescribed by the Head Office / Regional Office should be maintained. (D) Processing of Loan proposal:

After the loan amount is decided upon, the necessary documenta- tion should be completed as under.

i) Obtention of Loan Papers from the Borrower:

(a) After necessary forms and vouchers are prepared, the party's signature

shall be obtained at the required places on ADN-9, vouchers and in the

Jewel Loan Ledger (AB-4).

(b) All signatures in vernacular should be translated in English.

(c) Illiterate borrowers should affix their left thumb impression on the

papers/ledger. Such impressions should be described by the

concerned staff members under initials and the impression should be

duly got identified. Two copies of photograph should be obtained from

the borrowers and their left thumb impression should be obtained on

the reverse of the photograph, if not obtained while opening of the SB

account. One copy to be kept with the loan documents and the other

is attached to the ledger folio.

(E) Safekeeping of Jewels and papers

i) The jewels pledged shall be kept in thick transparent polythene bags.

These bags can be used for small loans or where the number of items

pledged can be conveniently kept in such bags. However, when the

jewels cannot be accommodated in this type of polythene bags, cloth

bags are to be used.

Contd….8


: 8 :

ii) JL Tag:

A tag giving the JL A/c number, the amount of advance and the name

of party is to be inserted before closing the polythene bag. If a cloth bag

is used, tag giving the said particulars is to be kept inside the bag

before closing and one additional tag is to be fastened to the bag.

iii) Joint Custody: As and when the Jewel loans are arranged, the jewel covers or bags

are to be kept inside the safe by the Manager in the presence of the

joint custodians. The smaller bags have to be kept serially in the

trays or bigger cloth bags attaching a card board ticket kept in each

bag giving the numbers of the loan accounts

(F)Safe custody of Loan Papers:

i) The Manager and the joint custodians shall check the jewels with the

ADN-9, enter the loan a/c numbers in the single lock cash book and

then keep them in the safe. Likewise, the loan a/c numbers of jewels

delivered also shall be entered in the single lock cash book. At any

point of time, the total number of jewel bag noted in the single lock

cash book shall tally with the physical number of bags kept under

joint custody.

ii) The loan papers are to be arranged serially and kept in a file or

pusthi separately under each four broad heads viz., JL(Ag.), JL (G)

Swarna Credit Card and JL (STF). Every year, new number begin-

ning from 1, followed by the year should be given under each broad

four categories referred to above using abbreviation viz., (JL (Ag.)

1/2010, JL (Gen.)1/2010 and so on.

G. Processing Charges and JA Fees:

On each loan, processing charges as applicable to respective loan

schemes and JA Fees as communicated from time to time are to be

collected / charged at the time of arranging the loan as per the circulars

issued from time to time. The guidelines communicated on collection of

Processing charges and JA fees, vide Circular No.200-2009-BC-CD

dt.11.09.2009 are reproduced hereunder.

Contd….9


: 9 :

“At present, Branches are collecting processing charges and Jewel Appraiser’s

fee in cash at the time of arranging the Jewel loans. This tends to deprive the

borrower of the psychological satisfaction of receiving full amount of the loan.

Keeping the same in view, it is decided to permit the branches to debit the

processing charges and Jewel Appraiser’s fee to Jewel Loan accounts.

However, the borrower’s option to pay these charges in cash will be continued.”

12. ACTION ON IRREGULAR LOANS

The Jewel loans both under JL(Ag.) , JL(Gen) including Swarna Credit Card

and JL(STF)schemes shall be recovered as per the repayment schedule given.

A) If the borrower has not repaid the jewel loan in full on or before the due date

or when the amount of the loan is likely to exceed the value of the

ornaments, whichever is earlier, ordinary notice should be sent. In any case

it should be ensured that sufficient margin is maintained to the outstanding

loan amount.

B) If there is no response to ordinary notice, registered notice with acknowledgement

due should be sent, besides contacting the borrowers personally, wherever

possible.

C) If the loan is not repaid, the jewels shall be auctioned by following the procedure

given under Para No.14.

Branches shall not allow Jewel loans to turn to NPA under any

circumstances. Recovery steps shall be initiated immediately after the expiry of

due date of the Jewel Loan and well before the outstanding balance exceeds

the market value of jewels pledged. The accountability in respect of clean jewel

loans (amount left over in the account after the auction of jewels and

appropriation of the proceeds to the loan account) will be fixed on the Branch

Managers during whose tenure the due date of the Jewel Loan has expired but

no action for recovery has been initiated and also the Branch Managers who

have worked subsequently in the branch and not taken any steps for recovery of

the loan and allowed the outstanding balance to exceed the market value of the

jewels pledged. However, if jewels could not be auctioned before the said time

limit on any justifiable grounds or on account of any reason which is beyond the

control of Branch and there is sufficient margin to the value of jewels and the

outstanding loan amount, AOD shall be obtained for such Jewel loans before

completion of two and half years with the prior permission of the Regional Office.

This provision should not be construed in any way as blanket permission for

continuing the JLs beyond two and half years.

Contd….10


: 10 :

13. RELEASE OF JEWELS ON REPAYMENT

(A) When the principal and interest are paid in full, the pledger's signature

in the ledger under 'Received the jewels pledged' is obtained. This

signature is compared with the specimen obtained already in the ledger

and the pledge forms to ensure that the signature is genuine. The JL

docket issued will also be taken back. When the signature is found to be

genuine, the jewels will be delivered to the pledger. (B) When the principal, interest and all bank charges are recovered in full,

security/ies to the jewel loan should be retained under general lien of the

bank, if borrower owes to the bank any amount directly or indirectly, (i.e.,

as a borrower or surety or guarantor or co-obligant) which is overdue

and security to that loan is insufficient, till all the dues either direct or

indirect are paid in full.

(C) Precautions:

i) When there is any difference in the signature recorded in the JL

ledger, attestation from a respectable person known to the bank

should be insisted upon.

ii) As far as possible, surrendering the docket issued at the time of

pledge by borrowers should be insisted upon. In the case of illiterate

persons, utmost care is necessary when delivering the jewels. In such

cases, surrender of dockets should be invariably insisted upon as this

will help to some extent to identify the persons.

iii) Another precaution to be observed is to ask the pledger to describe the

jewels pledged before they are handed over to him.

iv) The bag containing the jewels to be delivered should be taken out of safe

by the joint custodians and should be held safely by the Manager or

the concerned joint custodian until the jewels are delivered. It is advis-

able to deliver the jewels immediately after they are brought out of the

safe.

v) Endorsement in Ledger:

After the jewels are delivered, the Manager should endorse in the ledger

folio of the respective JL A/c in “Jewels Delivery Ledger (AB-4)” with date

and signature, the delivery of the jewels, thus,

Jewels delivered by me

(Signature with seal and date)

Contd….11

Circular No.129-2010-BC-CD Date:03.06.10 : 11 :

vi) Return of Jewels to Third Parties:

(a) Jewels can be returned to third parties after the loans are closed on

receipt of due authorisation letter from the borrower after following

the aforesaid procedure. The specimen signature of the person

receiving the jewels must be recorded in the letter of authority duly

attested by the borrower.

(b) The signature of the third party should be obtained on a Stamped

Receipt of the prescribed value in the respective folio of the JL

ledger at the time of delivery of the jewels. An endorsement must

also be made in the ledger by the Manager giving a reference of the

authority letter of the borrower. The letters of Authority are to be

preserved under Joint Custody.

(c) The letter of authority should not be accepted by branches, if the

letter is produced after the death of the borrower.

(D) i) Part Redemption:

Part redemption should be avoided as far as possible. However, when

such redemptions are made, an acknowledgement in the jewel loan ledger

giving the particulars of jewels delivered, its gross and net weights and

assessed value should be got signed by the borrowers. A similar note

should also be made in the relative ADN-9 under the heading "Part

deliveries of securities pledged".

ii) Delivery of Jewels of Deceased Borrower:

In case of the deceased borrower, the jewels can be delivered to the legal

heirs against the clearance of all the liabilities. Branches may dispose of

the claim papers at branch level when the net value of the assets is within

the discretionary powers specified and after completion of all formalities.

Claims beyond the branch discretionary powers should be disposed of

only after getting the permission of RO/HO on settlement of the claim.

iii) Sending of Jewels by Insured Post:

(a) After the loan is closed and only after receipt of a letter of request from

the borrower to send jewels entirely at his risk and responsibility, jewels

can be sent by Insured Post.

(b) If there is bank's branch, where the borrower resides, the jewels

should be preferably sent to our branch for being delivered against a

stamped receipt.

(c) Besides, out of pocket expenses/service charges for sending the

jewels by insured post, should be collected.

(d) Cancelled ADN-9 may be sent to delivering branch for the purpose of comparing the signature of the borrower.

Contd….12


: 12 :

[ (E) Where Jewels are not delivered after closure of the Loan:

i) Where the party has not called at the branch to receive the jewels remit-

ting the dues in full, an endorsement to that effect should be made in the

concerned loan folio of the Jewels Delivery Ledger (AB-4) under the full

signature of the Manager/Joint Custodian.

ii) The particulars of such jewels should be entered in the securities register

under the signature of the custodian and the joint custodian.

iii) Notice to the Borrower should be sent for taking delivery of the jewels and

constantly followed up. When the borrower approaches for taking delivery of the

jewels, the procedure as in the case of delivering the jewels on full payment

should be followed.

14. AUCTION OF JEWELS (A) Registered Notice:

In case the loan amount is considered not recoverable unless the jewels are

auctioned, final registered notice with acknowledgement due is to be sent to

the last known address of the borrower informing him of the proposed date

and time of auction. Minimum notice of one month shall be given to the

borrower for settling the dues before the gold is auctioned. The

acknowledgement card or the registered envelope received back undelivered

for any reason should be kept along with the loan papers.

(B) Newspaper Publication:

When there is no response to the Registered Notice or the Registered Notice

is returned or refused or where the notice of sale cannot be served on the

borrower or on the legal heirs of the borrower (in the case of death), a sale

notice is to be published in a local Newspaper having a fair circulation in the

area covered by the branch about 10 days in advance of the proposed date of

auction. It shall be ensured that the name of the borrower, who has repaid the

loan in full just before the publication of the auction notice is deleted from the

list given to the press by informing the same to the publisher through a letter or

phone or otherwise. However, Newspaper publication may be resorted to only

as per the directions of the Regional Office from time to time.

The notice of such auction sale should also be displayed on the Bank's

notice board and in prominent places.

The notice should contain the usual terms of sale and in particular that the bid

amount should be paid immediately in cash by the successful bidder.

(C) Loans of Rs.500/- and Below:

In the case of loans of Rs.500/- and below where auction of jewels become

necessary, all such cases may be taken up for auction twice in a year

preferably on the 15th of March and 15th of September every year.

Contd..….13


: 13 :

(D) Notice to the local gold merchants etc.:

i) Prior to the date of auction, the branch must give notice to the local gold

merchants, shroffs etc., to be present and bid at the auction. The signatures

of the persons to whom the notice has been circulated should be obtained.

The time of auction shall be fixed only after business hours.

(E) Waiver of Auction:

Auctioning of jewels can be waived if the borrower pays the loan amount

along with interest and other charges before commencement of the auction.

(F) Auction Procedure:

i) Collection of Advertisement charges:

Before auction of Jewels is commenced, branch shall calculate average advertise-

ment cost that has to be collected before the loans are closed.

The average advertisement cost or per account advertisement cost has to be

arrived at by dividing total advertisement cost by number of Jewel loan accounts

in the case of which advertisement is given and rounded off to the next five

rupees.

The expenditure incurred for giving advertisement through News paper can be

initially met by debiting the General Charges (Contingencies) A/c. However this

amount should be re-credited to the same account by debiting to respective

jewel loan accounts immediately.

ii) Auction Yadast:

(a) The Auction shall start at the advertised time.

(b) The bidder's name and bids have to be noted in the “Auction Yadast”

(Annexure III) and signatures have to be taken for the bids made.

(c) The “Auction Yadast” must be kept properly filed after the auction.

iii) Bidding:

(a) Each loan will have to be taken up separately and respective jewels are

auctioned item wise separately keeping the initial bid at a figure arrived at

after taking into account the prevailing price of gold. If auction proceeds of

few items / ornaments pledged by a borrower are sufficient to cover the loan

amount outstanding and other costs, the other ornaments should not be put

to auction.

{b) In case of auction of jewels for recovery of Jewel loans, branches

may auction the jewels for the highest bid in the first auction

itself.

(c) Staff members or their relatives, Jewel Appraiser or his relatives are not

permitted to participate in the auction.

Contd….14


: 14 :

(G) Disposal of Auction Proceeds:

i) After the final bid is made and accepted, the amount should be collected

from the successful bidder and the loan is closed.

ii) Proportionate cost of publishing the auction notice and other

incidental expenses must also be recovered from the proceeds.

iii) The balance, if any remaining after the adjustment of the loan amount

should be credited to SB or Current Account of the borrower under

information to him.

iv) When the borrower is not having his account or his account is closed

before the auction, the balance amount may be kept in suspense account

of the borrower and settled within one month under any circumstances.

(H) Delivery of Jewels to the Successful Bidder:

i) The signature of the successful bidder must be obtained in the respective

folio of Jewels Delivery Ledger at the time of delivery of jewels and the

Manager should endorse in the Jewels Delivery Ledger with date and

signature for having delivered the jewels to the successful bidder.

ii) The Manager must make an endorsement in the Jewels Delivery

Ledger (AB-4) indicating that an auction has been held after due notice

to the borrower, the sum of Rs.________ has been realized by accepting

the highest bid and the proceeds have been appropriated to the loan

account and the balance of Rs.____ is credited to SB / Current A/c

of the party or kept in suspense account of the party, if the SB /

current a/c is closed.

(I) Intimation to the Borrower:

i} After the auction process is completed, the borrower is to be informed of

the amount realised at the auction and balance, if any, payable to him after

appropriating the necessary amount to the loan account,

ii) In case of shortage, the party should be called upon to pay the balance

immediately and proper recovery steps shall be initiated immediately for the

recovery of shortfall in consultation with R O.

iii) A report of the auction held should also be sent to Regional Office with

full particulars and approval /confirmation from the Regional Office shall be

obtained.

Contd….15


: 15 :

15. JEWEL APPRAISERS

(A) Appointment of Jewel Appraisers:

The branches which are sanctioning/arranging the Jewel loans to their customers

require the services of the Jewel Appraisers for appraising of the jewels. The

Jewel Appraisers are to be appointed for this purpose on agency basis and the

powers to appoint the Jewel Appraisers are vested with the Head Office.

The following procedure should be adopted while making appointment of

the Jewel Appraisers.

i) The branches should select respectable and suitable candidates who

are having good experience in the appraisal of jewels and send their

applications in the enclosed proforma (Annexure-I) together with their

latest passport size photographs and two testimonials from

respectable persons in the area certifying the character and integrity of

the candidates, recommending their appointment, to the Regional Office

concerned.

ii) On receipt of the applications duly recommended by the branch, the

Regional Office shall forward the same to the Head Office with their

recommendations.

iii) The Head Office, after scrutiny would appoint the Jewel Appraiser and

send appointment letter to the branches.

iv) Letter of appointment is to be delivered to the selected candidate by the branch against his acknowledgement.

v) An indemnity bond from the Jewel Appraiser and Two creditworthy

persons, having good reputation and satisfactory dealings with the branch

in the enclosed proforma (Annexure-II) on a stamp paper of requisite

value shall be obtained and kept as security at the branch. The format of

Indemnity bond should not be changed without the approval of the Head

Office / Regional Office.

Security Deposit required as per Circular No.144-2007-BC-CD dt.28.07.07

is as under.

a) All newly appointed Jewel Appraisers Rs.50000/-

b) Existing Jewel Appraisers of Urban branches Rs.50000/-

c) Existing Jewel Appraisers of Semi-Urban branches Rs.35000/-

d) Existing Jewel Appraisers of Rural branches Rs.25000/-

Contd….16


: 16 :

vi) He should also give an authorisation letter to the branch to deduct 10%

of the Jewel Appraiser's fee payable to him and to credit the same to

his security deposit account on monthly basis. The interest applicable to

the security deposit of the Jewel Appraiser will be stipulated by the Head

Office from time to time.

vii) The Jewel Appraiser's fee payable to the Jewel Appraiser is fixed by the

Head Office from time to time.

(B) Termination / Resignation or death of the Jewel Appraiser:

i) The powers relating to termination or acceptance of resignation are vested in the Head Office

ii) Termination:

If for any reasons, the termination of the Jewel Appraiser is

warranted, the Head Office, after getting the report from the Branch /

Regional Office and deciding about it, should order for the termination

of the Jewel Appraiser and issue the termination order.

The security deposit of the Jewel Appraiser should be repaid only when

all the dues that may arise on account of the defective appraisal of the

jewels, are cleared and the jewels in respect of all the outstanding loans

have been got reappraised by the new Jewel Appraiser or the Jewel

Appraiser of the nearby branch.

iii) Resignation:

(a) If the Jewel Appraiser submits the resignation for acceptance, it should

not be accepted immediately unless all the jewel loan accounts in which

the jewels were appraised by him are closed in full settlement.

(b) If he wants the resignation to be accepted immediately, all the Jewels

Appraised by him in the jewel loan accounts outstanding on the date of

his resignation should be got reappraised by a Jewel Appraiser of near-

by branch or well-known goldsmith of integrity known to the branch and the

resignation of the Jewel Appraiser may be accepted after obtaining the

appraisal certificate from the goldsmith and collecting the reappraisal and out

of pocket expenses and the loss caused to the bank on account of the

defective appraisal of the jewels, from the Jewel Appraiser concerned.

(c) The security deposit of the Jewel Appraiser may be refunded afterwards, if

there are no other claims by the bank.

Contd….17


: 17 :

iv) Procedure to be followed in the case of death of the Jewel Appraiser:

(a) In the case of death of the Jewel Appraiser, the Jewels Appraised by

him should be got reappraised either by the Jewel Appraiser newly

appointed or by a Jewel Appraiser of near-by branch or a well-known

goldsmith of integrity, known to the branch, if there is delay in making

fresh appointment at the branch. Refund of the security deposit to the

legal heirs of the deceased Jewel Appraiser should be made after

collecting the reappraisal fee and out-of-pocket expenses, if any, and the

loss caused to the bank on account of the defective appraisal of the

jewels. The branch should also ensure that there are no dues to the bank

from the said Jewel Appraiser.

(b) The orders for refund should be issued by the Head Office.

16. JEWEL APPRAISER'S FEES ACCOUNT

(A) The fees at the prescribed rate (presently 30 paise per Rs.100/-) collected

while arranging each loan should be credited to this account.

(B) Once in a month, as at the end of the month, 10% of the total fees

credited to this account, should be transferred to Appraiser's Security

Deposit Account as per the letter of authority given by him at the time

of his appointment. The balance amount of fees may be credited to his

SB account at the branch.

17. JEWEL APPRAISER'S SECURITY DEPOSIT ACCOUNT

(A) The initial security deposit paid by the Appraiser should be credited to

this account.

(B) 10% of the total Jewel Appraiser's fees payable to the appraiser every

month should be credited to this account.

(C) Interest at the rate prescribed by Head Office from time to time

will be credited to this account in June and December, calculat

-ing interest on the basis of monthly minimum balance in the

account.

(D) Interest on this account should not be credited to his regular

banking account.

(E) The security deposit along with the interest accrued thereon is

refundable only on resignation /termination or death of the

Appraiser as stated under paragraph No.15.

Contd….18


: 18 :

(F) The rate of interest payable from the date of termination /

resignation or death of the Appraiser until repayment, is as

applicable for term deposits for the period for which the deposit

is held with the bank.

G) Refund should be made only after obtaining permission from the

Head Office.

18. OTHER GUIDELINES:

The other guidelines applicable to respective loan schemes as communicated

through the Desk Guide on Advances and Circulars, which are furnished

hereunder shall be followed.

S. No.

Circular No. & Date Subject

1 Desk Guide on Advances Pragathi General Gold Loan scheme

2 01-2009-BC-CD dt.02.01.2009 Revision of due date for recovery of interest on Pragathi General Gold loan scheme

3 Desk Guide on Advances Pragathi Swarna Credit Card scheme

4 114-2009-BC-CD dt.21.05.2009 Jewel loan under Agriculture Sector

5 182-2009-BC-CD dt.07.08.2009 Jewel loans against Pledge or Gold coins

6 200-2009-BC-CD dt11.09.2009 Debiting of processing charges & JA fees.

7 Desk Guide on Advances Staff Jewel loan scheme

19. REPORTING OF JEWEL LOANS SANCTIONED BY BRANCHES:

Branches shall report the Jewel loans of Rs.25000/- and above sanctioned by them

every month to the Regional Office in ARM-9 statement separately for Jewel loans (Ag.)

and Jewel loans (Gen.) / Swarna Credit Card on or before scheduled date. Regional

Offices, after reviewing the ARM-9 statement received from Branches shall submit a

review report in ARM-105 to the Head Office with their observations on or before

scheduled date.

All Branches and Regional Offices are advised to follow the above guidelines

scrupulously without giving any scope for frauds.

Clarifications required, if any, on this circular may be sought from Credit Department,

Head Office, Kadapa, through respective Regional Office, as per extant guidelines.

(K.PREETAM LAL) CHAIRMAN

Enclosure to Circular No.129-2010-BC-CD Date:03.06.10 ANNEXURE - I

ANDHRA PRAGATHI GRAMEENA BANK HEAD OFFICE :: KADAPA

CREDIT DEPARTMENT

The Chairman, Andhra Pragathi Grameena Bank, Credit Department, HO : KADAPA – 516 001.

Application for appointment of Jewel Appraiser

I, ____________________________ hereby submit my bio-data for your kind verification and consideration of my candidature for appointment as Jewel Appraiser to your _________________Branch.

1. Name of the applicant :

2. Name of the father :

3. Present residential address & Phone No.:

4. Permanent Address :

5. Educational qualifications :

6. Date of Birth and Age (Enclose Proof) :

7. Experience in the field

(Enclose relevant proofs) :

8. Present Occupation (other than gold work):

9. Details of assets of the applicant :

a) Movable :

b) Immovable (Enclose proof) :

c) Annual Income with sources :

10. Details of direct and indirect liabilities of the applicant’

a) Direct liabilities :

b) Indirect liabilities :

Photo

Enclosure to Circular No.129-2010-BC-CD Date:03.06.10

11. Whether the conduct certificates from two of the reputed persons of the village are enclosed?

12. Whether applicant is acting as Jewel Appraiser to any of the branches of our Bank / other Banks?

13. Whether the applicant’s relative/s is/are acting as Jewel Appraiser in any of our branches? If so, furnish the details.

14. Any other information: I shall abide by the terms and conditions of the Bank and work sincerely and honestly in appraisal of gold ornaments / jewels. I am willing to provide a security deposit of Rs.__________/- and furnish Indemnity Bond-cum-Guarantee Bond as required. I submit that I am fully aware that my services will be engaged for appraising jewels only and I will not be claiming anything as an employee of the Bank at any future date. I enclose conduct certificates issued by two of the reputed persons of the village. Place: Signature of the applicant Date:

Encl: Recommendations of the Branch Manager: (Social status / reputation in the village etc. shall be covered. If necessary use separate sheets) Place: Signature of the Branch Manager Date:

Recommendations of the Regional Manager Place: Signature of the Regional Manager Date:

Enclosure to Circular No.129-2010-BC-CD Date:03.06.10 ANNEXURE - II

INDEMNITY BOND-CUM-GUARANTEE BOND

THIS DEED OF INDEMNITY is executed on this ………………………..day of …………………………… 200…. by

and between Sri ……………………………………………………….……………………………………, s/o.

……………….…………………………………………………………………….. aged about …………..….. years, R/o.

……………………………………………………………………………………………………………………………………………………

………………………………………………………………………………… (hereinafter called the first part)

AND

1) Sri ………………………………………………………………………………, s/o. ………………………………………… aged

about ………………….. years, R/o. …………………….………………………………………………………

……………………………………………………………………………………………………………………………………

2) Sri ………………………………………………………………………………, s/o. ………………………………………… aged

about ………….. years, R/o. ……………..……………..……………………………………………………

…………………………………………………………………………………………………………………………………..

(hereinafter called the second part) in favour of Andhra Pragathi Grameena Bank, a scheduled bank

sponsored by Syndicate Bank licensed by Reserve Bank of India (RBI) under the Regional Rural

Banks’ Act 1976 and having its Head Office at Kadapa and having one of its branches at

………………………………………………….. (hereinafter called Bank).

The expression first part, second part and bank shall mean and include its successors assigns

legal heirs, legal representatives, etc.

Whereas the bank has appointed the first part as a jewel appraiser. Whereas it was a condition

the first part should give indemnity and also a third party guarantee.

Whereas in consideration of appointing the first part as a jewel appraiser the second part

hereby agreed to stand as a guarantor for indemnifying the bank against any losses, damages,

caused by the first part during the course of appraisal of jewels.

NOW, THESE PRESENTS WITNESS AS FOLLOWS:

I. In consideration of the said appointment first part hereby undertake at all times to

indemnify and keep harmless the Bank from all claims and demands made and all

actions and proceedings taken against and all losses suffered and all expenses incurred

by the Bank by reason of any act, omission, neglect or default of the first part in the

course of discharge of duties while acting as jewel appraiser of the Bank or thereafter.

Enclosure to Circular No.129-2010-BC-CD Date:03.06.10

II. The first part hereby agrees with the Bank as follows:

i) The first part hereby admits he is not an employee of the Bank but whenever

called upon by the Bank or their attorney, first part shall faithfully discharge the

duties of appraising and valuing gold or jewels entrusted to and after appraising

and valuing, immediately hand over the same to the Bank.

ii) That first part hereby agrees he shall prepare and sign all the requisite papers

relating to the appraisal and valuation.

iii) That first part hereby agrees he will not lose, misappropriate or damage any gold

or jewel while in his custody or under his supervision.

iv) That first part hereby agrees he will observe complete and very strict secrecy in

the matter of the Bank’s transactions or any other information relating to the

Bank or their customers or any trade secrets which first part may become

possessed of while in the service of the Bank and will not reveal the same

except when compelled to do so by a Court of Law.

v) That in the event of any loss arising or accruing or likely to accrue to the Bank

either in cash or in reputation from any of the causes herein mentioned it shall be

competent for the Bank to determine and fix the amount of the said loss and the

amount so fixed shall be binding and be conclusive evidence against the first

part and shall not be questioned or challenged in a Court of Law.

vi) That first part shall have no right to claim the return of any security that first part has

made for or on any other account or that first part may hereafter make or any assets or

funds belonging to first part or any money lying to his credit under any kind of account

with the Bank except upon full payment and satisfaction of all and every kind of claim,

loss or liability, be the nature of the same secured or otherwise, present or remote,

future or contingent or circumscribed by any limitation whatsoever.

vii) That for the purpose of this deed all act, omission, neglect or defaults of any of deputies

or persons authorised by first part shall be deemed as acts, omissions, neglects and

defaults of the first part.

viii) That on breach of any of the covenants herein contained or for any other reason which

the Bank consider as sufficient, it shall be open to the Bank to cease requisition of

services of the first part as jewel appraiser without prejudice to the rights and remedies

which they possess under this deed.

Enclosure to Circular No.129-2010-BC-CD Date:03.06.10 III. The second part hereby agrees with the bank as follows:

i) In consideration of appointing the first part as a jewel appraiser the second part hereby

undertakes at all times to indemnify and keep harmless the Bank from all claims and

demands made and all actions and proceedings taken against and all losses suffered and

all expenses incurred by the bank by reason of any action, omission, neglect or default

of the first part in the course of discharge of his duties while acting as jewel appraiser of

the Bank or thereafter.

ii) The second part hereby stood as a guarantor/surety agreeing to reimburse for any

losses caused by the first part to the Bank.

iii) The second part hereby waive all his rights which are available under Indian Contract

Act.

iv) This indemnity cum guarantee shall continue till all the claims if any are fully satisfied or

settled.

v) The bank is entitle to proceed against the first part or second part or jointly to recover

its losses or damages etc. caused by the first part during his services as a jewel

appraiser.

IN WITNESS WHEREOF the first part and the second part signed this deed on the day, month and the

year mentioned above.

(Signature of the first part)

i) ii)

(Signatures of the second part)

In the presence of : 1. 2.

Enclosure to Circular No.129-2010-BC-CD Date:03.06.10 ANNEXURE – III

ANDHRA PRAGATHI GRAMEENA BANK

______________________________BRANCH

Loan A/c No._____________________ Date:

AUCTION SALE SCHEDULE

Particulars of articles sold by Public Auction at the Office of the Andhra Pragathi

Grameena Bank _______________________Branch on ___________ at _________

(time) and the bids made at the auction and disposal of the articles and the final price.

S. No.

Particulars of articles

Estimated weight

Estimated price

Bidder’s Name

Each Bid Price

Bidders Signature

Received the above articles Sale Proceeds Rs.___________________

Adjusted as under:

Principal Rs.___________________

Final Bidder’s Signature Interest Rs.___________________

Costs Rs.___________________

SB / C a/c

of the borrower Rs.____________________

Total Rs.___________________ Place: Date: JOINT CUSTODIAN CUSTODIAN MANAGER

ADVANCES AGAINST SECURITY OF GOLD ORNAMENTS … · Jewel Loan on the security of Gold coins sold by...

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