Finance Minister Nirmala Sitharaman on Monday assured that strict action would be taken if banks or Non-Banking Financial Companies (NBFCs) violate established rules while auctioning gold pledged for loans. Addressing the Lok Sabha during Question Hour, she emphasized that both NBFCs and Scheduled Commercial Banks (SCBs) must adhere to similar guidelines when handling gold loan defaults.
Strict Rules for Gold Auctions
Sitharaman stated that there are well-defined and strict procedures in place for auctioning gold when a borrower fails to repay their loan. These rules ensure that borrowers are given sufficient notice before their pledged gold is put up for auction.
“There is a process for giving multiple notices to borrowers, informing them that their loan repayment is due. If they still fail to pay, the bank or NBFC is left with no option but to proceed with an auction,” she explained.
Even during the auction process, she reiterated that stringent regulations are followed to ensure transparency and fairness.
Action Against Violations
The finance minister assured that any violations of these procedures would be addressed. “If any instances of non-compliance are reported, I am willing to take the details and act upon them,” she said.
Her response came after DMK leader Kanimozhi Karunanidhi raised concerns over how gold auctions are conducted when borrowers default on loan repayments.
Gold Demand Remains Strong in India
Responding to a question from Congress leader Manish Tewari, Sitharaman dismissed concerns that India’s demand for gold is declining. Instead, she noted that the demand is rising.
“In India, particularly in households and small businesses, gold is seen as a secure and liquid investment. Women, in particular, continue to show strong interest in gold as an asset class,” she added.
The Gold Loan Data is given below. 👇
The finance minister’s remarks highlight the government’s commitment to maintaining fair practices in the financial sector while acknowledging the cultural and economic significance of gold in India.