· rs.3,000/- to rs.10,00,000/- for all loan amount above the specified limits will require as per...

Unimoni Financial Services Limited Product Policy –Version 1.0 Loan against Gold Jewellery

Loan against Gold Jewellery

Sign Off

Sr. No. Name Designation

1 Ramachandra Mallya CEO & Managing Director

2 Krishnan R. CFO

3 Rajkumar Muthu Chief Risk Officer

Document Identifier Details Current version V1 Date Effective November 27, 2019 Review Cycle 1 year Document Author / Department GL Product Team Approver Board Meeting

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Gold Loan-Product & Credit Policy V1.0 UNIMONI Financial Services Ltd. For Internal Circulation only

INDEX Particulars Page No.

1 Product Features 3-4

2 Credit Checks 5

3 Credit Authority Matrix 6

4 Valuation Process 7

5 General Guidelines 7-8

6 Takeover Policy 8

7 Gold Loan Renewal / Rollover / Enhancement - Policy 9-11

8 Unacceptable Ornament policy 12-14

9 Product & Policy Deviation Matrix 15

10 Auction Policy 16-39

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Section 1 : Product Features

Gold loans are provided to any Resident Indian who meets the KYC guidelines under the General Category

Against Gold ornaments pledged as collateral.

The purpose of the loans will be for consumption, business or as specified as end use by the borrower, and not For any illegal or illegitimate purpose.

Loan Type Term Loan

Tenor 3 months to 12 months as per scheme

Loan Amount

Rs.3,000/- to Rs.10,00,000/- for all loan amount above the specified limits will require as per

credit matrix

Rate Per Gram Based on scheme

Agreement Application cum Pledge Agreement

Loan to value (LTV)

Up to 75% of Jewellery Collateral.

• Interest Repayment as per scheme and Principal repayment at end of tenure.

Charges

• Foreclosure / Renewal Charges: Min 50/- maximum 5% of the loan amount

(depending schemes conditions)

• Auction admin charges: Up to Rs.5000/-, AHC-Rs. 500/-

• Letter charges: Rs.50 per notice

Partial Liquidation Partial liquidation of loan can be done as per customer request.

Fresh appraisal of Gold to meet LTV should be based on Karat -wise calculation for remaining

ornaments.

Disbursement

• Cash disbursal Up to Rs.20000/-

• Disbursal above Rs.20000/- online transfer /cheque payment/ prepaid card payment

can be done on customer request.

Documentation & Eligibility • KYC Compliance is mandatory

• PAN card / Form 60 for loan amount of Rs.500,000/- and above Loan amount as well

receipt payment above 50,000/-

• PAN card and CIBIL score checking is mandatory for loan amount Rs.500,000/- and

above.

• Fineness and purity of Gold has to be checked.

Quality Assessment

Gold Valuation Quality of the Jewellery /Ornaments are assessed by in-house Valuer as

per guidelines

Processing fees Scheme based (0.25 to 3% Minimum Rs.100 to 200/-)

Penal interest

➢ Penal Interest will be charged on outstanding due of customer’ specific schemes as

per schemes chart, these charges will applicable after due date day wise will be

charged

➢ Penal interest will be charged on Principle overdue case as per scheme chart

Age Minimum 21 years – Maximum 72 years

Schemes As circulated from time to time, duly assessing market conditions

Rate of Interest As per schemes

End use The purpose of the loans will be for consumption, business or as specified end use by the

borrower, and not for any illegal or illegitimate purpose.

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1.1. Loan to auction Customer

➢ Acceptable with Zonal Head approval, however it has to be recovered in case of a prior auction loss.

System check should be completed.

1.2 18 to 19 Karat Gold Jewellery

Lending against 18 karat gold for New / Existing customer’s 18kt standalone jewellery with purity grid 75-80%

with no auction history and no loss in auction

1.3 RPG for Loan Amount Calculation

Deduction to ornament weight applicable as per the karat purity listed in below table.

Karat

Min (Impurity

deduction)

Max. (Impurity

deduction)

Min (Impurity

deduction in %)

Max. (Impurity

deduction in %)

22 HM 0 0 98% 100%

22 2 7 95% 98%

21 5 10 88% 94%

20 5 15 81% 87%

18 10 20 75% 80%

** Purity range will vary scheme to schemes and location to location

1.4 Documentation

1. Standard Acceptable ID Proofs:

➢ Aadhaar Card,

➢ Voter ID Card,

➢ ID card issued by Govt./recognized companies/Professional bodies,

➢ PAN Card, Passport, Driving License, Photo ration card Address Proof:

2. Standard Address Proof:

➢ Passport,

➢ Vote ID Card, Utilities Bill, Aadhaar card (Electricity/water/Telephone/Gas Bill),

➢ Copy of registered Sale, Deed/Lease Deed,

➢ bank statement last three months with reflecting customer name and address

➢ Municipal tax receipt, Driving License, Aadhaar Card

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Section: 2.0 Credit Checks:

2.1 Tele verification

1) For above 5 Lakhs, Tele-verification should be done with blood relatives/ immediate family

Members or at office contact numbers if he is a salaried customer

2) TVR for renewal cases not mandatory if no change in address or contact details

2.2 CIBIL check

3. Validity of CIBIL report is for 6 months. If customer has closed his loan account and comes for

fresh loan fresh CBIL report to be generated.

4. No CIBIL verification for customers with loan amount less than Rs.5, 00,000/-

5. if the loan amount is cumulative exposure more than 5 lacs CIBIL Need to generate

2.3Specially Designated National (SDN) check – in system

All customers to be deduped on name and date of birth against the SDN list. List to be

Downloaded on fortnightly basis. Status of SDN checks to be mentioned on Application form.

2.4 Verification of the Ownership of Gold:

The ownership of the Gold jewellery will be established by:

Self-declaration cum undertaking for ownership for Gold given by borrower in the application form.

Tele-verification with blood relatives confirming ownership

Declaration is obtained from the borrower in loan application (DPN) form

Section: 3.0 Credit Authority Matrix :

Credit Authority New Borrower Existing Borrower

Over-riding authority in case

of Dispute

BCV Up to 2 lacs Up to 3 lacs BH

RCV 2 to 3 lacs 3 to 5 lacs RH

ZCH 3 to 5 lacs 5 to 8 lacs ZH

NCH / CCO 5 to 10 lacs 8 to 12 lacs CBO

MD & CEO Above 10 lacs Above 12 lacs

****Branch Sanction limits are revised on a periodic basis as per volume / vintage

*Credit Checks to be followed and documents to be collected if the Loan amount is exceeding as per below Limit

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3.1 If the Loan is 5 lakhs to 10 Lakhs Cumulative exposure at Cust ID level:

• CIBIL Score should be 600 and above

• TVR is Mandatory to conduct by blood relative

• CPV by conducted any one-off employee (BM / GL head, BCV, RCV, RH, ZH) need to be

documented along with DPN copy

• Dual Valuation –BCV and GL Head /BM has to conduct the Valuation if RCV is available

he can also conduct

• Joint PD to be done by GL Head / BH, BCV/CSM or RCV

3.2 If the Loan amount is above 10 Lakhs and above Cumulative exposure at Cust ID level:

• CIBIL Score should be 650 and above

• TVR is Mandatory to conduct by blood relative

• CPV by conducted any one-off employee (BM / GL head, BCV, RCV, RH, ZH) need to be

documented along with DPN copy

• Dual Valuation required one can be BCV another should be branch Head / GL Head, if

RCV is available same location he can also conduct

• Joint PD to be done by GL Head / BH, BCV/CSM or RCV

• If Customer salaried required company id card, along with latest last three months’

pay slips required and form 16

• If customer is Self-employed last two years ITR required (latest yrs) / along with

Business proof / GST certificate / Shop & establishment required

• Minimum income should be Rs.2.50 lakhs p.a. as per ITR/Form16

• 6 Month bank statement confirming address, name (Business). (Same as disbursal

account)

• If customer is running partnership business, required partnership deed copy

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Section: 4.0 Gold Jewellery Valuation Process

The ornaments/Jewellery shall be weighed by approved valuers, in electronic weighing machine. For the

purpose of lending, only karat wise calculation will be considered i.e. exclusion of weight of stones / beads.

Rubbing stone and Acid test to be the core verification tool for purity check. Additional tests recommended in

policy guidelines can be done by branch as additional checks for risk mitigation.

Stipulated guidelines on valuation process:

A. Rubbing on soft stone: Appraiser takes up the gold ornament and rubs it on the soft stone. According to

the variation in colour of the gold, Valuer decides whether it is gold or not and the fineness of the gold in

terms of 22k, 21k etc.

B. Sound Test: In this method solid ornaments is put on a glass table and according to sound it produces,

the quality of the gold can be judged.

C. Finishing Test: The ornaments made out of gold will have perfect finishing rather than ornaments made

out of other metals by which the appraiser can come to a proper conclusion. D. Weight Test: Gold is most dense metal heavier compared to any other metal. Based on judgment of Valuer can decide whether particular ornament is gold or not. E. Scratching: Scratching on a specific point to know the purity inside

F. Acid Test: Gold ornaments would be rubbed on the Soft Stone and acid would be applied on it. Fake

gold will produce white fumes from the rubbed part.

G. Destructive Test: The gold ornaments has to be cut into two pieces through which the appraiser can

find out if there is copper or any other metals present in the inner portion of the ornament.

In case Valuer is not comfortable with test conducted from A to D as mentioned above, he would further

conduct test from E to G based on Borrower’s consent and the requirement of the case. However for

sanction of any loan, Valuer compulsorily conducts tests A to D and tests E to G above are optional and

need based.

***All the Loans dual valuation is mandatory

Section: 5.0 General Guidelines

• All securities will be released on repayment of all dues or on realization of the outstanding

amount of loan subject to any legitimate right or lien for any other due of the borrower. In the

event of such right to be exercised, the borrower shall be given notice about the same with full

particulars about the remaining claims

• The Company shall not interfere in the affairs of the borrower except for the purposes provided

in the terms and conditions of sanction of the loan

• Turnaround time to communicate the status on transfer of borrowable account would be 21

days post receipt of request. Due-diligence as per process to be complete

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Section 6.0 Gold Loan Takeover Policy: Documentation to be retained at branch:

➢ Original Receipt of Takeover Loan from the Financial Institution (Gold only from Reputed NBFC, Banks is allowed for takeover)

➢ Customer undertaking duly filled and signed by Customer (Refer Annexure 2)

➢ Security Cheque duly signed by customer.

➢ KYC Documents as per standard policy.

Procedure/Clarifications:

➢ BCV/Cashier to fill Credit appraisal memo (Refer Annexure 1) and raise to the ZH for approval with copy to RCV & RH.

➢ Cash advance entry to be passed in FA by BCV/Cashier only.

➢ Takeover Limit per customer is Rs.1, 99,999-/-

➢ Takeover Loans to be approved by Zonal Heads only.

➢ Please make sure about the above procedures and also ensure that Cash is tallied before Day end.

➢ Accountability of Takeover Loans will be on BCV, Cashier & RH.

➢ Zonal Heads to ensure all necessary procedures followed & all documents are in place at the time of

approving the loan. Deviations:

➢ Security Cheque deviation.

➢ Takeover from other than reputed banks.

Deviations to be approved by Zonal Head on case to case basis.

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Section 7.0 Gold Loan Renewal / Rollover / Enhancement:

RBI Circular :

➢ Ref: Gold Loan Renewal / Rollover / Enhancement with reference of RBI Circular - DNBR/2016-17/45 Master Direction DNBR. PD. 008/03.10.119/2016-17

➢ As per RBI Circular In the cases of roll-over of short-term loans, where the proper pre-sanction assessment has been made, and the roll-over is allowed based on the actual requirement of the borrower and no concession has been provided due to credit weakness of the borrower, then these shall not be considered as restructured accounts. However, if such accounts are rolled-over more than two times, then third roll-over onwards the account shall be treated as a restructured account.

Gold Loan Renewal / Rollover / Enhancement Process:

7.1 Pre sanction credit assessment has to be done prior to the disbursement of each single loan. The branch

has to do the Personal Discussion (PD) prior disbursement and update the credit summary sheet accordingly.

7.2 Credit Summary report will have customer income & asset details along with bureau score & current

Loan details.

7.3 Maximum 2 time’s renewal/rollover is allowed, and every time renewal/rollover is done, the branch should collect renewal declaration from the customer. If customer is doing a transaction without paying principle amount, it shall be considered as renewal, even if the tenure has not got over.

7.4 While doing the renewal branch has to collect the renewal declaration from the customer in Vernacular

language for a better understanding of the customer.

7.5 Post maturity system will flag Number of times renewal/rollover done and maximum 2 times it will be allowed as per NDSI master circular

7.6 Post rollover/renewal is done 2 times, then the system will not allow further renewal/rollover and the

branch must collect the principal amount from the customer along with due interest for loan closure.

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Credit Summary Sheet

Credit assessment Summary Sheet

Loan Account Number 123456 Status

Loan amount 100000

Customer Name Sunil

Kumar

Age (Within Norms) 32 Yes / No

Occupation Salaried

Bureau (Within Norms) 650 Yes / No

Income (P.A.) 250000

Gross Weight (gms) 50

Stone Weight (gms) (As per permissible Norms) 10 Yes / No

Net Weight (gms) 40

Average Karat (As per permissible Norms) 20Kt Yes / No

Average LTV (As per permissible Norms) 70% Yes / No

Gold Ownership Verified Yes / No

Loan amount CPV Banking Income Documents

> 5 Lacs Yes NA NA

> 10 Lacs Yes Yes Yes

Loan Approved as per Grid Verified Yes / No

End use of the Loan

Renewal/ Rollover Reason :

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Request for Loan Renewal / Rollover / Enhancement

Date: To, The Branch Manager Unimoni Financial Services Ltd. ………… branch State : Sir, Sub: Request for loan renewal/rollover/enhancement Ref: Gold Loan Account No.00000000 dated ../../…. against the security of gold Jewellery ornaments This letter has reference to my referred existing loan which was availed from Unimoni and the term of which is about to expire. I request you to kindly renew/rollover this loan for next term, provided the company is satisfied with the assessment of my requirement. In this regard, I hereby request, confirm and declare as below:

1. Request you to kindly renew/rollover or enhancement of the referred loan on applicable terms and conditions for a further period of 12 Months with effect from 00/00/0000, against the security of the gold ornaments already pledged in your favor, as security for the referred loan. I am aware that the said renewal/rollover or enhancement is subject to the realization of the interest/charges due to the existing facility and I confirm that I have already paid the due interest/charges of the existing loan.

2. If my request is approved, kindly utilize the loan amount of the renewed loan for closing the existing referred loan, by adjusting the same towards the outstanding amount of the existing loan and disburse the balance amount to me. The Terms and conditions specified unless inconsistent to the terms specified herein under shall continue to remain applicable to the renewed loan.

3. I confirm Unimoni shall be entitled to open sealed packets containing gold security during the tenure of the said rolled over the loan and conduct any investigation (‘’Audit”) in connection with the quality of gold security at any time.

4. I understand and acknowledge that Unimoni shall have an absolute discretion to sanction or reject my request without assigning any reason and/or enhancement. I hereby confirm and agree that Unimoni shall not be responsible or liable in any manner whatsoever to me for such rejection or any delay in notifying me about Unimoni’s decision and/or for any cost/losses /damages/ expenses or other consequences caused by reason of such rejection or any delay in notifying me about Unimoni decision.

5. I confirm that any communication notice from Unimoni to us at the address mentioned herein below shall be considered as valid and sufficient notice to me under law.

6. I understand that Unimoni has absolute discretion to grant/ refuse such offering to me and to impose any further condition as it may deem fit for such a grant.

7. I hereby confirm and agree that all terms and conditions of the existing referred loan shall continue to be applicable save and expect the terms and conditions as modified (if any) while considering the rollover of the loan. Thanking you Customer Name & address Customer sign

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Section 8.0 Loan against Gold: Unacceptable Ornaments:

V 1.1 Please find below list of Ornaments unacceptable for collateral purpose.

Sr. No. Ornament Name/Items Unacceptable Across

1 Baju Bandh Unacceptable Across PAN India

2 Bangadi Unacceptable Across PAN India (acceptable if plastic removable)

3 Gold Ornaments with Wax items Unacceptable Across PAN India. Acceptable if following conditions met 50% deduction or higher deduction based on gold content 1) For wax items more deduction should be done than the standard if the gold content in the ornament is less.

2) Single wax filled ornament not to be accepted.

3) Ornaments with Wax items to be accepted in such a combination that Gross weight of these items should not be greater than 50% of gross weight of total pledged ornaments.

4) Paper thin gold plated ornaments should not be accepted at all.

4) BCV must do proper appraisal to see that the quality of Gold is good, proper appraisal with justification.

4 Bangle with plastic Unacceptable Across PAN India (acceptable if plastic removable and without wax)

5 Kundan Set Unacceptable Across PAN India. (Acceptable Only If non gold content like Threads, Wax fillings, Stone is less than 50% )

6 Rudraksha/black beads Unacceptable Across PAN India.

7 Items below 1 gm PAN India We can accept items of 1 gm and above for pledge subject to condition A. If only 1 to 2 gm ornaments are collaterals of the loan and there are no any other items to be added for the loan then maximum Rs 9000 loan is possible at customer ID level (which is three times of our min loan amount 3k) irrespective of schemes B. No item to be accepted below 1 gm C. 1 gm restriction is on item level and not on pair level.

8 Watch strap Unacceptable Across PAN India

9 Mukut, crown Unacceptable Across PAN India

10 Gold pot, bowl, spoon, hair clip, button, thali, elephant, gold safety pin, idols, etc.

Unacceptable Across PAN India

11 Medallion Unacceptable Across PAN India

12 Broad Bangle ( above 48gms) - Below 48gm, it would be acceptable subject to condition customer is ready for deep cut/destructive test/use of filer (as applicable in


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writing as on date of loan and branch would perform appropriate check prior to lending)

13 Melted piece of gold or fine gold or raw gold/raw gold in jewellery form


14 NANAKUZHU Unacceptable Across PAN India Except South 2 Subject to following conditions met & along with ZH approval. A) Gross weight to be taken with Thread. B) Net weight to be taken without Thread. C) This is all applicable if Gold content is more

than 35%. If less then not acceptable. D) Ornament needs to be packed in original state (With Thread) & not in bits and pieces. E) Approval from ZH is mandatory. For e.g. if Gross weight along with thread is 100gms & if gold content is 35gm and above then acceptable else not acceptable.

15 White gold Unacceptable Across PAN India

16 Mangal sutra - count restricted to 3 per customer ID, Mangal Sutra (Ratio accepted upto 50% non-gold content and 50 % gold content) Preferably to be pledged by female borrower if male borrower then Tele-verification to be done with family member if Mangalsutra is one of the collaterals.

Unacceptable Across PAN if stone weight is more than 50%.

17 Items unacceptable as per RBI – Bullion (any item with purity of 995 or above)


18 Items unacceptable as per RBI – Coins, gold biscuit, gold bar etc. In any shape , size and carat (Coins with hook in pendant shape removable, Coins in necklace/Chain removable, coins in rings are also not acceptable)


19 Pendant/Locket with God image God image pendant not removable from chain/necklace accepted provided verifiable from audit

Unacceptable Across PAN India if pendant weight is more than chain/necklace weight. Pendent / Locket must not be kept as independent ornament.

20 Any thin/delicate gold ornaments should not be considered for pledge because while apprising the stones it may tear or get broken and then, the customer might demand for its replacement.


21 Galsari/Putali/Gathale Unacceptable Across PAN India

22 Broken Ornaments Unacceptable Across PAN India

23 Rajashtani Items Unacceptable Across PAN India (Accepted in Rajasthan only)

24 Hamil items Unacceptable Across PAN India (Accepted in Rajasthan only)

25 Any ornament having purity below 18 ct Unacceptable Across PAN India

26 Any item which has non gold content of 50% and above of total weight of ornament is not acceptable for pledge and applies to all item list


27 Rajasthani items Unacceptable Across PAN India(Except Rajasthan) Following conditions to be met which, is applicable to Rajasthani items only being used in Rajasthan state - A. We can accept total gold weight to non-gold content as acceptable in proportion to 35:65 ratio. For example, if a Rajasthani ornament weighs 100 gm, an item with maximum deductions of 65 gm

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can be acceptable if gold content is >= 35gms. If deductions are more than 65gm, item will come under non acceptable item B. All branch staff should be trained enough to identify and valuation of such items C. This relaxation is only applicable to Rajasthani items being used in Rajasthan state.

28 Kaasu (Very Thin Plated Gold Item Like Paper with God symbols, Religious symbols etc.)


Important Points to Remember: 1) If any item from above list is already pledged same needs to be released at the time of loan closure or re book.

2) Any thick/abnormal weight items of which purity cannot ascertained only by normal rubbing test on stone, a) branch should use filer/cut/destructive method in presence of customer with his/her approval b) Apart from rubbing test, combination of other test methods like sound, flexibility etc. also to be used for valuation purpose of such items c) Appraisal has to happen at multiple points of a single item

3) Items having any type of tags is not acceptable (They can be accepted if tags are removed) 4) If Stone weight of the ornament is greater than 50% then ZH can approve upto 5% deviation subject to following conditions,

a) Good Repayment track of the customer in the existing loans. b) These ornaments to be accepted in combination with other acceptable ornaments & not to be pledged as single

ornament. c) CIBIL score above 650 (irrespective of loan amount/cumulative exposure ) d) No auction settlements in the past e) If auction settlement happens in the past there should not be any loss incurred by company.

5) If single ornament with Total weight >100 grams, single Broad bangle > 50 grams, plain bangle > 32 grams then dual

valuation to be done by BCV and BH / GL Head. If RCV present at same location, then can do the valuation. Approval for this

to be sought from ZH / ZCH for the same. Loan amount approval matrix remains unchanged.

Section 9.0 Product & Policy and Process Deviation Matrix:

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Product & Policy Deviation Matrix

S.no Type of Deviation

BCV / BH/ GL Head

RH/RCV RCH ZH/ZCH PH / NCH

CCO / CBO

MD & CEO

1 Non-Standard KYC N

N N N N N Y

2 Contact Point Verification N N N N N N Y

3 Rate Per Gram N N N N N N Y

4 Processing Fee & Closing Charges Y Y Y Y Y Y Y

5 ROI Deviation N N N N N N Y

6 Any Product Deviation N N N N N N Y

7 Take over documents deviation & PDC Chq / N N N Y Y Y Y

9 Employee Loan Documentation N N N N N Y Y

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Income Documents & (ITR, Bank statement , Pay slips & Form 16 , Business Proof)

N N N N N Y Y

11 Gold Kart Purity deviation N N N N N Y Y

12 CIBIL Score deviation N N N Y Y Y Y

Auction Process & Policy Deviation

S.no Type of Deviation

BCV / BH/ GL Head

RH/RCV RCH ZH/ZCH PH / NCH

CCO / CBO

MD & CEO

1 Gold Packet Movement ( without Gunman or Normal Guard

N N N Y Y Y Y

2 Gold Packet Movement in Local transport N N N Y Y Y Y

3 Gold Packet Movement above 50 grams In Local transport

N N N Y Y Y Y

Product and Process approval Matrix

S.no Type of Deviation BCV / BH/ GL Head RH/RCV RCH ZH/ZCH PH / NCH CCO / CBO MD & CEO

2 Third party & Nominee gold release approval N N N Y Y Y Y

4 Gold Ornaments capping Exception N N Y Y Y Y Y

5 Gold weight 100 grams above approval N N N Y Y Y Y

6 Stone weight up 5% deviation N N N Y Y Y Y

7 Purity Renewal N N N Y Y Y Y

8 Loan tenure expired for partial interest collection N N N Y Y Y Y

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Section 10.0 AUCTION POLICY

INDEX SI.No Particulars Page No.

1 Introduction 20

2 Public Auction 20

3 Organization structure for auction 20

4 Identification of Accounts for Auction 20

5 Authorization for gold auction 21

6 Intimation to the borrowers 21

7 Auction centers 21

8 Auction Announcement 22

9 Auction Lots & Reserve price 22

10 Due diligence of Participants in Auction and Earnest Money Deposit.

22

11 Bidding Confirmation 23

12 Receipt of bid amount & Delivery of gold to bidders 23

13 Accounting of auction proceeds 24

14 Re-Auction of Gold 25

15 Loan to bidders against the Auctioned gold 25

16 Refund of surplus / Recovery of shortfall 26

17 Bidding by the company / related concerns 26

18 Maintenance of auction file 26

19 Disclosure of auction details in the annual report of the Report

26

20 Empanelment of Auctioneers, Commission, Roles and responsibility.

26

21 Time Lines 27

22 Process flow Auction 27-31

23 Annexures 32-39

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Unimoni Financial Services Ltd., (‘Company’) has formulated various lending schemes against the collateral security of Gold ornaments. Borrowers must repay the loan amount together with the accrued interest and other charges due (if any) latest by the end of the tenure fixed as per norms prevailing in each scheme. The asset pledged under the loan accounts with nil/part repayment (including interest and other charges) within the fixed tenure, shall be taken for public auction after complying with herein laid down process and procedures, as per the RBI norms and regulations*. Public auction can be also initiated whenever probability of a short fall in the releasable value of the security pledged at the prevailing market rate from the total dues payable by the borrower, is anticipated. However, the Company will take all possible efforts to persuade the Borrowers to release the jewellery by repaying the dues to avoid auction.

In tune with the above guiding principles, the auction policy and procedure of the auction shall be as follows:

1. AUCTION PROCEDURES As advised in the above notifications from RBI to put in place an Auction policy duly approved by the Board of Directors, the existing policies and procedure will be replaced in full.

(a) “Public Auction”

The term “Auction” used in the policy shall mean realization of asset pledged under any Gold loan scheme in the Company, through public auction only.

(b) Organization structure for auction The Company shall have a dedicated division in Head Office (Central Credit and auction team) to initiate, supervise and monitor the auction procedure including adherence to the approved policy. The division will function under the overall control of CBO/CCO. RCV/BCV/BM/RA/RH/ ZH any of these officials shall be present at the auction centers and oversee the actual auction proceedings, and they will be entrusted with the responsibility for the proper conduct thereof.

(c) Identification of Accounts for Auction The Central Credit and Auction team must identify the “Auction Account” and to initiate & complete the auction process adhering to the approved auction policy. In normal circumstances “Auction Account” will be identified from the below:

1. Auction due to accounts becoming NPA

I. An asset becomes non-performing when it ceases to generate income for the NBFC.

II. A gold loan inclusive of unpaid interest / Matured principle is overdue for a period of 90 days will be considered as NPA

2. Auction before completing the loan tenure

(i) Auction due to depletion in security value – If there is an erosion in the realizable value of the asset pledged under any gold loan scheme to cover the dues (Principal + Interest + other charges), such cases can be taken for auction. The Central Credit and Auction team should monitor the releasable value of the asset pledged in accordance with the price of gold in the market.

(ii) Auction of Gold ornaments identified as spurious / low quality – The loan account in which pledge of spurious / low quality gold ornaments have been detected subsequent to disbursement may be taken up for auction.

(iii) Before moving gold loan accounts for Auction under the above exceptional situations, internal

recovery procedure should be initiated to recover the dues from borrowers. Branch can submit the details of initiatives taken for recovery of such cases to Central Credit and Auction team for consideration. They will proceed auction of such cases, if the initiatives taken are satisfied.

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(d) Authorization for gold auction Once the accounts has been identified and listed as “Auction Accounts” by Central Credit and Auction team, the proposal in a structured format shall be put up to the CCO for approval. The Central Credit and Auction team shall ensure that the list is accurate, complete and in compliance with the approved Auction Policy.

(e) Intimation to the borrowers (i) Once an account has been identified as “Auction Accounts” a notice shall be sent to borrower by

registered post with acknowledgement due card requesting them to immediately pay the dues failing which the assets pledged under the loan account would be put on public auction without further notice for the recovery of the dues in the loan account. The notice should send in an approved format furnishing the date, time and venue of the auction

(ii) If any such notices returned undelivered to the borrower, intensive action should be taken to locate the borrower, reconfirm the KYC documents and re-evaluate the asset pledged. The responsibility for ensuring the compliance would be vest with the concerned branches from where the loan was processed, unless otherwise instructed by the Company.

(Iii) The acknowledgment card or unopened, undelivered letters etc. should be preserved and

systematically stored for future retrieval. The responsibility to ensure the compliance with the above policy guideline shall vest with the Central Credit and Auction team. Approved format for Auction notice is given in annexure 1

(f) Auction centers

(i) The auction should be conducted in the same taluk where the branch is located, so that all the branches, where the auction accounts belongs, shall be considered as auction centers.

(ii) The auction can be also conducted in respective zonal offices collectively for the branches, where

auction at the branches has not being successful conducted due acceptable reasons. Physical movement of auction accounts from various branches to auction centers can be done with sufficient security supports.

(iii) The company management may accord approval for new auction centers from time to time if needed.

(iv) Auction centers should be equipped with appropriate, adequate and functional infrastructure such as space, storage arrangements, CCTV cameras, electronic weighing balance etc.

(g) Auction Announcement

(i) An advertisement showing the details of accounts listed for auction with date, time and venue shall be issued in at least two local newspaper, one in a vernacular language and other in a national daily.

(ii) Such notification in newspapers should be published at least 2 days before the scheduled auction date.

(iii) Copy of the auction announcement shall be displayed in the notice board of the branch. (iv) Compliance of the above policy to be ensured by respective zonal offices.

Approved format of the auction advertisement is given in Annexure II

(h) Auction Lots & Reserve price

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(i) The ornaments taken for auction must be segregated into convenient lots to facilitate easy disposal based on various factors such as purity, quality, expected number of participation of bidders and prevailing market rate of gold.

(ii) The ornaments should be auctioned off at a price close to the prevailing market price on the day of auction. A reserve price for each lot to be fixed by Central Credit and Auction team considering the prevailing market rate. The proposed reserve price for auction shall be above 85% of the previous 30 days average closing price of 22 carat gold as declared by IBJA (India Bullion % Jewelers Association Ltd). The value of the ornaments of low purity in terms of carat can be proportionately reduced.

(iii) Adequate insurance coverage and security must be arranged in advance considering the quantity and the number of participants.

(i) Due diligence of participants in Auction and Earnest Money Deposit.

(i) A reasonable amount EMD (Earnest Money Deposit) should be remitted by each participant. The EMD amount will be fixed by Company from time to time considering the volume of auction accounts and prevailing market conditions.

(ii) Any participants to be allowed into the auction hall only after proper KYC verification. Copy of the PAN card shall be collected from them.

(iii) Representatives of any company/firm can also participate in the bidding by providing a valid authorization letter, Copy of the registration certificate and a copy of the PAN of the company. The representative should submit his/her KYC documents too for verification.

(iv) The pledger also can participate in the auction after remitting the EMD and proper KYC.

(v) Individuals and entities having known criminal background should not be allowed to participate in the auction.

(vi) IMD payment details and refunding of IMD details are noted in Annexure C of the document.

(j) Bidding Confirmation

(i) Bidding can be done only when reasonable number of bidders participates in the auction.

(ii) Each lot/Individual gold packets can be separately taken up for auction for the security reasons and better realization.

(iii) Bidders has the right to inspect the lot/Individual gold packets before commencement of the auction in the presence of authorized officers of the company and approved auctioneer.

(iv) The bid shall be confirmed then and there in favor of the bidder quoting the highest rate.

(v) Bids for substantially lower rates that the reserve price should not be confirmed without prior approval from HO (Central Credit and Auction team). The reason for low rate may be ascertained by Central Credit and Auction team and approval may be accorded considering the market conditions too.

(k) Receipt of bid amount & Delivery of gold to bidders

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(i) Once a bid confirmed to a bidder, 15% of the bidding amount including the EMD (nonrefundable) with us to be remitted to Company on the same day of bid. Successful bidders will get 2 days’ time to remit the balance amount.

(ii) A letter in a pre-approved format should be obtained from the successful bidder along with the terms and condition for the remittance of balance amount which shall be done within 7 days from auction date. (Format of the letter given in Annexure III)

(iii) Failing of remitting the balance amount within the time, the bid will be considered as cancelled. A penalty of 5% of the bidding amount or the loss incurred to company due to gold rate fluctuation whichever is higher will be levied on cancelled bids also the 15% of the bidding amount including the EMD will be forfeited and shall not be refunded to Bidder

(vi) Any amount on auction including the EMD can be collected only by Account payee cheque, DD or through online transfer to Company account.

(v) Bidders will be liable to pay all applicable taxes on the bidding amount (GST etc.) as per the regulatory directions prevailing in the state.

(vi) Gold to be delivered to the successful bidders only after getting bank confirmation on the receipt of bidding amount in full in the account of the Company. Till the receipt gets confirmed, gold should be kept under the safe custody of Auctioneer and the Company representative jointly in the auction center. An acknowledgement signed in an approved format should be obtained from the bidder on receipt of gold. (Format of the receipt given in Annexure IV)

(vii) Company needs to collect following documents as mandatory before handing over the ornament / gold packets to the Bidder.

1. GSTIN Certificate copy issued by Govt. 2. PAN Card copy and Aadhaar Card copy 3. Address proof (Shops & establishment / VAT registration certificate) 4. Letter head of Jeweler shops.

(l) Accounting of auction proceeds.

(i) Auction accounts can be settled from the auction proceeds within 1 working day after the receipt confirmed in our bank account.

(ii) Auction charge up to Rs.5000/- can be charged on each auction accounts.

(iii) All Government taxes, Auctioneers commission also to be paid off after completing each auction.

(iv) After finalizing Post Auction Bid, Company should collect additional 3% charges towards GST on approved bid amount.

(v) Maximum CASH that can be collected from an individual is restricted to Rs. 1,99,999/-, remaining amount towards approved bid to be collected in Electronic mode of payment like NEFT/RTGS only…

(m) Re-Auction of Gold

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(i) If any lot/Individual gold packets in the auction find no bidders for the reserve price, and the bidding price is considerably low which may cause loss to the Company, such lots/Individual gold packets may be withdrawn from the auction. Follow the below instructions in such situations,

(ii) Inform the Central Credit and Auction team and ask them to take adequate steps to proceed legally against the customers and the said ornaments might fall in the category of fake gold.(ii) Such gold ornaments may be taken for melting either in-house or through an outside agency, in the same lots as taken for auction. Auctioneers and the Company official in charge should remain present during the melting activity.

(n) Loan to bidders against the Auctioned gold

No loan shall be approved to bidders by pledging the auctioned gold fully or partially, in the same branch or any other branches of the company.

(o) Refund of surplus / Recovery of shortfall

Once auction of the pledged gold is completed in line with the norms of the Policy, and after receiving the bid

amount, the relevant lot is settled with the successful bidder. Thereafter, the surplus from the said auction, if

any, is first adjusted to the said Customer’s old loss and existing dues. The remaining surplus is to be refunded to

the Customer in the following manner

Refund of surplus / Recovery of the shortfall:

1. Auction Surplus – Any amount in excess after settling the auction accounts, auction charges and applicable charges and commission, will be payable to the borrower.

2. An intimation will be sent to the borrower through registered post, stating the auction details, and demanding the borrower to surrender the loan receipt and to claim the refund

3. Auction surplus amounts can be refunded to the respective customer bank account only. If the Customer has already updated his/her bank details, the surplus to be refunded through NEFT / IMPS / Cheque.

4. Rightful lien on such surplus may be retained in case the borrower has other unsettled liabilities to the Company.

5. Legal action for recovery in case of loss in auction in individual accounts may be considered where-ever required and is justified post cost-benefit analysis is done.

(p) Bidding by the Company / related concerns Unimoni Financial Service Ltd or its related entities shall not participate in the public auction conducted by the Company. (q) Maintenance of auction File An auction file must be maintained in the auction center under the custody of Auction center in charge (CAT -BH/GL Head , BCV ,RCV ,ZCH respectively) and should be produced for internal audit verification. (r) Disclosure of auction details in the annual report of the Report

The follow information regarding the auction must be disclosed in the annual reports of the company:

⎯ No. of auctions conducted.

⎯ No. of loan accounts placed for auction.

⎯ Outstanding value of the auction accounts.

⎯ Auction excess value fetched.

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⎯ Auction refunded to borrowers

⎯ Auction loss recovered from borrowers.

(s) Empanelment of Auctioneers, Commission, Roles and responsibility.

(i) Auction can be carried out only through auctioneers empaneled by the company, as approved by the board of directors.

(ii) In the case if auctioneers are not available for auction, Company can authorize any of its senior officials who have expertise in auction related jobs to carry out the duty of auctioneer for the specified auction.

(iii) The auctioneer and the Company should have to enter into a valid agreement to carry out the auction for the year as per the terms fixed by the Company.

Letter/Notices Timelines:

Bucket/DPD Type of Notices

30 DPD

Due letter

60 DPD Loan Recall letter & Auction Notice

<10%Margin regardless of any DPD

Margin cum Auction Notice

Mode of dispatching these Notices:

Type of Notices Revised Mode

Due Letter Registered Post

Margin cum Auction Notice Registered Post

Loan Recall & Auction Notice Registered Post

Process flow Auction:

1. Once Central team is identifying auction cases, they will send mail to Branch team for further Credits and auction - RCV / RH, ZCH/ ZH, BCV ’s responsibility to check for Auction File Completion and eligibility of cases to be auctioned

2. Cases to be forwarded to Credit Team for Final Auction by 15th of the month. Second lot can be circulated by 20th of every month, dates can vary depending on the pool size and gold prices

3. Date of Auction to be decided, should be at least 2 days after newspaper publication 4. Auction Advertisement to be given in 2 Newspapers by Zonal / Central Team. It should also contain Loan Nos. of

each account to be auctioned

a. 2 Newspapers i.e. – a) National Daily b) Regional Newspaper – A minimum of 2 days’ notice

Auction Day

a. Updated sheet with interest details to be provided by branch to Credit/Credit Team – or Regional CV b) Jewelers in Auction c) Quotations to be taken – minimum 3 or 2 depending basis participants of Jeweller d) People to be present in Auction (Participation Memo must be signed off and filed in auction file. Format

attached)

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e) RCV and BCV along with basis on availability RH /ZH, ZCH, audit team

5. Auction approval After taking valuation of gold, BCV/RCV must send the required documents to Central team for approval. The central team will verify and confirm whether the process and documents are in order and get required approval from the concerned authorities. Gold ornaments can be handed over to the vendor who quoted the highest value, only as per the approval received from central team. The accounting of auction proceeds also will be updated by Central team.

6. Auction MR Loss When Auction MR Loss (minimum receivable amount) arises due to some unavoidable reason, we need to take approval from concerned authority

If MR loss is < 2% need to take approval from any two of the designated employees - Product Head & CBO / NCH / CCO and if MR Loss is > 2% approval to be taken from CEO/MD

7. Auction Process Documentation

a) Branch Responsibility / Auction center Responsibility

i. Auction Annexure with complete details sent to BCV & RCV. This needs to be mailed. ii. Proof of due letter recall letter and auction letter sent. Returned letters in case of not delivered.

iii. Copy of customer KYC iv. Original Pledge Ticket (office copy)

b) Credit / Credit Responsibility

i. 3 Quotations ii. Newspaper ad at least 2 days prior to auction in one national and one vernacular daily. Same

to be filed. iii. Pan Card of Vendor iv. Vendor KYC Documents – Proof of address v. Total Amount Received from Auction & Loan number wise Annexure Copy

vi. Participation Memo vii. Gold Transfer Memo (Annexure A)

8. Gold Movement Process for Auction Cases (In case of multiple branch location where auction is conducted at a single location) by dist.

Authorized Employees to Carry Auction cases Gold Packets

• From Branch Side – Any 2 on Roll employees from Gold loan, From Branch Side – GL Staff any two on role employees. (Preferably BSM/CSM/ BH/GL head/ BCV)

• From Credit Team – Credit underwriter or Credits Representative- RCV / Internal control team

• Gold movement should have team members between Branches, Credit/Credit, RH accompanied by armed guard. Single person not allowed to transfer Gold.

• Gold Transfer Memo to be prepared in Duplicate and to be signed by both branches and employees carrying Gold.

• Intercity Gold Movement Approvals need to be raised for approval to NCH / CCO & CBO /ZCH • In the event of non-auction of packets that have been moved, these need to move back to the Parent

branch as per the above process. With 5 working day from Parent branch GL Staff any two on role

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employees. (Preferably BSM/CSM/ BH/GL head/ BCV) collect the packets from auction center same bas been update IBGT Form

• All the packets moving back to Parent Branch should be in sealed condition. In case any of the packets got opened during the auction process but not auctioned then collaterals along with the damaged packet to be moved to new packet & sealed in presence of RCV at auction center itself & then the only movement to be done.

9. Critical Documentation

Activity/Item First Person/ Team

Responsible

Second Person/

Team Responsible

1. Newspaper Ad with Branch Names & Loan Nos 2

days prior to Auction in National & Regional

Newspaper. Sample Ad attached

Regional CV/ Central

Team

ZCH

2. Quotations of 3 vendors (we would need a

quotation on Jewellers letterhead with the Total

no of cases and the total quote for all 3 vendors)

Regional CV / RCH ZCH

3. KYC documents of Vendor (Pan Card and Address

Proof)


4. Final Quotation Regional CV / RCH ZCH

5. Auction Participation Memo(Vendor appraisal

format)


6. Gold transfer Memo Regional CV / RCH RH / Auditor /ZH

7. Notices – Due letter, Loan Recall, Auction Notice

– POD /acknowledgment

Branch Team & Central

team

NCH

10. Other Important Guidelines:

• POD to be retained for all letters sent case wise.

• POD should mention details of Loan Account. Customer Name should be clearly mentioned

• Tracker has to be updated if the Notice is delivered or not. (tracker format has been attached)

• POD, Acknowledgement & Un-delivered letter has to be filed with the Pledge Document (Pawn Ticket) for 100% Cases

• Agency/Post should be asked to give acknowledgements for all the notices sent.

• Acknowledgement & Un-delivered letter has to be filed with the Pledge Document (Pledge copy) for 100% Cases. No exceptions.

• Please check for reasons of return. In case of incorrect address, please re-check address with application form and residence proof. Capture the address in detail in CRM – landmark, Street No., Plot Nos., etc.

▪ Incase address is different, then same needs to be sent for system correction to Ops Team and notices need to be resent on correct address (if address change happened need collect the New address proof) attach along with DPN

▪ A copy of the Margin cum Auction Notice & Loan Recall & Auction Notice needs to be filed in the branch for all customers or Central tracker

11. Approved Couriers (If the below courier services are not available then notices to be dispatched through Registered Post.

Auction Letter has to be sent through registered post)

• DTDC

• DHL

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• Blue Dart

• First Flight.

GST Applicable

Post Auction bid finalize we need to collect additional 3% charges towards GST on approved bid amount. Format

is attached as Annexure D

Restriction on Cash transaction

Maximum CASH that can be collected from an individual is restricted to Rs. 1,99,999/- remaining amount

towards approved bid to be collected in Electronic mode of payment like NEFT/RTGS only.

Documents required from bidder

Also, we need to collect following documents as mandatory before handing over the ornament / gold packets to

the Jeweler.

• GSTIN Certificate copy issued by Govt.

• PAN Card copy & Aadhaar Card copy

• Address proof (Shops & establishment / VAT registration certificate)

• Jeweler Shop's letter head.

Documentation (Auction file) In Branches

• Proof of all notices sent

• Newspaper advertisement copy

• Office copy of Pledge Document (Photo copy)

• Gold Transfer Memo

• Customer KYC

• Application cum DPN (photo copy)

With RCV/Auction Canter (Auction file) • Newspaper advertisement copy

• Quotations

• Participation Memo

• Vendor KYC Docs

• Office copy of pledge documents (Original)

• Application cum DPN (Original

• Letter sent detail

• Gold transfer Memo

• Customer KYC

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Annexure 1(a)

GL notice (after 365 days) – registered post

UNIMONI FINANCIAL SERVICES LTD

Branch: …............

(Phone no :...................)

Mr./Mrs.……………………,

……………………………….

……………………………….

Sir/Madam,

Please find below the details of your gold loan availed from us, as on date:

Loan Tnx. no: Loan date Loan amount Loan expiry date

Total outstanding Due amount (including penal charge)

Inspite of the several reminders you have not settled the dues, even after the expiry of the loan tenure.

Hence, we request you to pay the above mentioned total dues and close the loan to avoid proceeding against the

pledged security.

Thanking you

Branch Head

Date :

Note: Please ignore if paid