SBI Gold Loan Promotion PDF

` 8. ASSET PRODUCT-GOLD LOAN 1. PURPOSE: A general-purpose non speculative Loan scheme for individuals, against collateral security of gold ornaments & specially minted gold coins sold by Banks. SBI Realty Gold Loan: It can be availed by pledge of gold ornaments includ...

` 8. ASSET PRODUCT-GOLD LOAN 1. PURPOSE: A general-purpose non speculative Loan scheme for individuals, against collateral security of gold ornaments & specially minted gold coins sold by Banks. SBI Realty Gold Loan: It can be availed by pledge of gold ornaments including gold coins sold by Banks to meet undernoted requirements: i. Margin money requirement in housing loan. ii. Registration charges of house property. iii. Project price escalation Important Note: At present, loans are not granted against security of Primary Gold i.e., 24 carats gold bars and biscuits. Also, while granting advance against the security of specially minted gold coins sold by Bank, operating units should ensure that the weight of coin(s) does not exceed 50 grams per customer. 2. ELIGIBILITY CRITERIA: (i) Individuals who are 18 years of age with steady source of income including Bank’s employees and pensioners. However, submission of proof of income by borrower is mandatory. (ii) Proper KYC compliance of the borrower (iii) Capacity to service EMI in Gold Loan (EMI based Demand Loan) Account (iv) The Borrower to scores 40 and above in Risk scoring Model (RSM), (v) A declaration from the borrower be obtained by the branches about ownership of the ornaments offered for pledge For Realty gold Loan: In addition to above, Customer should have housing loan with SBI (both existing and new) with minimum capacity to service the EMI (as applicable) Number of Gold Loans per Customer: At the time of sanction of Gold Loan to the existing borrowers, there should not be more than three Gold Loans including the proposed one. INCOME TAX BENEFIT (Only for SBI Realty Gold Loan Variants): Income tax benefit will be available as under: Section 24(b) – Interest 135 ` Section 80C - Principal Section 80EEA - Interest Subject to fulfilment of the other conditions prescribed under the respective sections of Income Tax Act’ 1960. 3.PRODUCT VARIANTS: (I) SBI PERSONAL GOLD LOAN SCHEME A. SBI Gold Loan Bullet repayment ( 3, 6, 12 months) B. SBI Personal Gold Loan (EMI based) C. SBI Realty Bullet Repayment Gold Loan D. SBI Realty EMI Gold Loan E. SBI Top Up Gold Loan F. SBI Staff Gold Loan (Demand Loan) (II) AGRI GOLD LOAN: (A) MC-KCC-GOLD LOAN FOR AGRI PRODUCT (B) MULTI PURPOSE AGRI GOLD LOAN SCHEME (6431-4258 & 6431-4161) (III) SME GOLD LOAN SCHEME 4.LOAN AMOUNT: - Loan cannot be sanctioned for less than Rs 20,000 (This minimum amount limit for Top up Gold Loan is Rs.10,000 and for Realty Gold Loan, it’s Rs.50,000). - Loan amount to be linked to the need / value of the gold less usual margin, with a cap of Rs.50.00 lacs. - Loan cannot be sanctioned for more than Rs.50,00,000 per customer, which means that the total loan amount sanctioned to the customer in one loan account or two loan accounts or maximum three gold loan accounts cannot exceed Rs.50,00,000/- Note: ‘The maximum weight of specially minted gold coins sold by Bank should not exceed 50 grams per customer’. For Agri Segment No Minimum Loan Amount is stipulated and maximum loan amount is Rs 25.00 lacs. SME Gold Loan minimum is more than 1 lac and maximum are Rs 20.00 lacs. 5. MARKET VALUE AND ADVANCE VALUE OF GOLD The Market Value and Advance Value for per gram of Gold of different Carats purity is updated at the beginning of every month and the same is made available in SBI Times - > My Workplace>Department2 - > Precious Metals -> Daily Reports. 136 ` (in the event of increase / decrease in the rates vis-à-vis the above-mentioned declared Market Value by 5% or more, the Market and Advance Value are revised accordingly by them) 6. QUANTUM OF ADVANCE (i) As per the gold prices fixed every month by the concerned circle for 18/22/24 carat Gold. (ii) Further, due care should be exercised while assessing the gold ornaments to find out purity of the metal at the time of sanction of loans. 7. MARGIN: Bullet Repayment Gold Loan: 3 months and 6 months Bullet Repayment Gold Loan: 30% 12 months Bullet Repayment Gold Loan:35% SBI Reality Bullet Repayment Gold Loan: 35% Top up Gold Loan: Existing EMI and Bullet Repayment Gold Loan:50% (However, minimum margin of 25% is to be maintained by the customer throughout the tenure in all her/his gold loans together against the common security.) 8. REPAYMENT PERIOD: Bullet Repayment Gold Loan: 3 months, 6 months and 12 months as applicable SBI Reality Bullet Repayment Gold Loan: 12 months SBI Personal Gold Loan (EMI Based) : 36 months SBI Reality EMI Gold Loan: 36 months Top Up Gold Loan: End of Term. Maximum Period is 12 months or currency of the original loan whichever is lower. ADVANCES TO STAFF AGAINST GOLD ORNAMENTS: (DEMAND LOAN) Recovery: (a) Loans for medical/educational expenses/marriage of sole dependents: Demand loans repayable in a maximum of 60 monthly instalments (inclusive of interest). (b) Loans for housing purpose: Recovered in 100 monthly instalments (inclusive of interest) 137 ` (c) Purposes other than those mentioned above:36 monthly instalments (inclusive of interest). 9. VARIOUS GOLD TESTING METHODS a) Touch stone Method b) Nitric Acid Test c) Specific gravity test d) Gold Assaying Machines (Karatometers) Note - The purity of Gold should be independently determined by Branch Cash Officer/Award Staff (assigned the job of Gold Loan processing) by using any of the first three methods or all the four methods based on the nature of ornaments and satisfaction of the assessor. 10. PHOTOGRAPHS OF ORNAMENTS Once the purity of the gold is assessed and found to be acceptable photograph of all gold ornaments offered as security shall be taken at the time of processing of the loan. Photograph of the gold ornaments shall be signed by the joint custodians along with borrowers. 11. VALUATION OF GOLD ORNAMENTS: For Gold Loans exposure at CIF level: Amount Empaneled Gold Particulars Appraiser Up to Rs.50000/- Optional Up to Rs.1 lakh in Amaravati, Chennai, Hyderabad and Thiruvananthapuram Circles Above 50000/- but One For Amaravati, Chennai, below Rs.5 lakhs Hyderabad and Thiruvananthapuram Circles, one appraiser is compulsory for loans above Rs 1,00,000. Rs. 5 lacs and above Two (For all -- circles) Once the purity of the gold is assessed and found to be acceptable, photograph of all gold ornaments offered as security shall be taken at the time of processing of the loan. A printout of the photograph shall be kept with the documents. The photograph shall be in large size so that all ornaments are clearly visible. 138 ` 12. CUSTODY OF GOLD ORNAMENTS PLEDGED The gold ornaments must be placed in the strong room under the joint custody of the Branch Manager/Manager of ‘P’ division /Accountant and the Branch Cash Officer/Award Staff (Senior Special Assistant/ Special Assistant / Senior Assistant Assigned the job of Gold Loan processing), after entering in the Gold Loan Ledger. Tallying of the closing balance of Gold Loan bags with the Ledger shall be done on daily basis by the joint custodian. Polythene bags shall be used in our bank in place of cloth bags. 13.SURPRISE VERIFICATION: Controllers should ensure verification of quality and number of gold ornaments pledged at the branches by an official other than the joint Custodians on quarterly basis (50% or maximum 100 gold loan accounts whichever is less) to safeguard the bank’s interest against fraud. 14. DELIVERY OF ORNAMENTS: On repayment of a loan, the ornaments held as security for it together with the demand Promissory note duly discharged should be returned to the borrower(s) and his/their Acknowledgement for receipt of the ornaments obtained in the Gold Loan Ledger. The Acknowledgement should state that the ornaments received by him/them are ‘complete and in order’. Where it becomes necessary to retain the ornaments pertaining to a Closed account, these should be kept in the joint custody of the official in charge of gold Ornaments and the identified joint custodians as an article in Safe Deposit. The full Particulars of the relative loan account should be entered and authenticated by both the Officers in the Safe Deposit Register. Suitable notice may be served to the borrower Indicating our rate of charges as safe custody to be charged. The borrower’s Acknowledgement for subsequent delivery of the ornaments should be obtained in the Gold Loan Ledger and the fact noted in the Safe Deposit Register. Applicable Safe Deposit Article Charges to be recovered from the borrower. 15. DELIVERY OF ORNAMENTS TO A THIRD PARTY: In normal circumstances, delivery of Gold ornaments shall be made to the borrowers only. In very exceptional circumstances and based on the undoubted/specific authority of the borrower, delivery of ornaments to a third party, who must be properly identified, may be made on repayment of loan. 16. CALLING UP OF ADVANCE: 139 ` A letter should be served to the borrower advising him/ her to deposit the amount /regularise the account within 15 days, immediately after the accounts become irregular. (I) PRODUCT VARIANTS UNDER PERSONAL GOLD LOAN SCHEME A. 3 Months Bullet Repayment Gold Loan: Objective: To provide short-term loan to customers to meet their short term bonafide requirements, with repayment facility up to 3 Months. Nature of Facility: Demand Loan Margin: 30% Repayment Period: Bullet Repayment of Interest and Principal at the end of the term. Interest will be charged to the account at monthly rests but will become due for payment along with principal only on maturity i.e., EOT (End of Term). B. 6 Months Bullet Repayment Gold Loan: Objective: To provide short-term loan to customers to meet their short term bonafide requirements, with repayment facility up to 6 Months. Nature of Facility: Demand Loan Margin: 30% Repayment Period: Bullet Repayment of Interest and Principal at the end of the term. Interest will be charged to the account at monthly rests but will become due for payment along with principal only on maturity i.e., EOT (End of Term). C. 12 Months Bullet Repayment Gold Loan: Objective: To provide short-term loan to customers to meet their short term bonafide requirements, with repayment facility up to 12 Months. Nature of Facility: Demand Loan Margin: 35% Repayment Period: Bullet Repayment of Interest and Principal at the end of the term. Interest will be charged to the account at monthly rests but will become due for payment along with principal only on maturity i.e., EOT (End of Term). D. SBI PERSONAL GOLD LOAN (EMI BASED) 140 ` A traditional variant of P- segment Gold Loan with repayment Facility of 36 EMI. Facility: Demand Loan Margin: 25% Repayment period: Maximum: 36 months Repayment Mode: The repayment of EMI should commence from the month following the month of disbursement Pre-payment Charges: NIL Notes: 1. The LTV ratio prescribed by RBI under this scheme is 75%. The following factors have to be kept in mind for this purpose: - (i) LTV of 75% has to be maintained throughout the tenor of the loan. (ii) The LTV ratio has to be computed against total outstanding in the account including accrued interest. (Under Bullet Repayment Gold Loan interest would be charged to the account at monthly rests but would become due for payment along with principal only at maturity i.e., after 12 months). (iii) The LTV ratio has to be computed against the current value of gold. 2. Once the LTV of 75% is breached, the account would become out of order in terms of IRAC norms and if the account thus continues to remain out of order for 90 days it would become an NPA. The margin requirement would have to be re-worked whenever there is an increase in interest rates and also when the market value of gold increases. 3. Since the above two conditions i.e., upward movement of Rate of Interest and price of gold can happen any time, the operating units/Branches have to be meticulous in sending the Notices to the borrowers in case the LTV goes above 75%. The notices for maintenance of margin of 35% under Bullet Repayment Gold Loan by cash deposit or gold ornaments are required to be sent on the periodicity as mentioned below for: (i) On the day when LTV is above 75%, 1st Notice is to be sent. (ii) If the above position continues then 2nd Notice is to be sent after 15 days from 1st Notice. (iii) If still the above position continues then 3rd Notice is to be sent after 30 days from 1st Notice. (iv) In case the borrower fails to replenish the margin even after 3rd Notice the operating units/Branches will be required to auction the gold ornaments as per extant instructions of auctioning of Gold Ornaments. This is mandatory irrespective of the IRAC status of the account. For better monitoring of LTV breaches, a Dashboard has been made available at MIS Online>Master Dashboard>Loans & Advances dashboard>Gold Loan LTV monitoring. As per the RBI directives, LTV in P-Gold Loan is monitored on the basis of current value of Gold. Accordingly, the security value is required to be updated in CBS as per the rate declared by Precious Metal Department from time to time. A functionality has therefore 141 ` been placed in CBS w.e.f 01.12.2020 to update the current value of Gold. In case of decrease in market value, the Drawing Power (DP) gets reduced in Liquid Gold loan (OD) automatically. However, the said stipulation (reduction of DP as per current value of Gold) is not part of the present Arrangement Letter. It has therefore been decided to amend Arrangement Letter accordingly, which is as per Annexure: PL-53(ii) of the Circ number: NBG/PBBU-PMD-GL/21/2020 – 21 dated 11.02.2021. E. SBI REALTY BULLET REPAYMENT GOLD LOAN A variant of SBI Realty Gold Loan where repayment of loan is permitted by way of bullet repayment during the loan period/End of the term i.e., there is no repayment obligation during the loan term. Nature of Facility: Demand Loan Margin: 35% Repayment Period: Maximum 12 months Repayment Mode: Bullet Repayment of Interest and Principal at the time of closure/end of the term. Interest will be charged in the account at monthly rests but will become due for payment along with principal only on maturity. F. SBI REALTY EMI GOLD LOAN A variant of SBI realty Gold Loan where principal together with interest is payable in equated monthly instalments (EMIs) Nature of Facility: Demand Loan Margin: 25% Period of loan: Maximum 36 months Repayment mode: Date of EMI repayment in next month should be kept before the date of account opened during loan disbursement month. G.TOP UP GOLD LOAN An additional gold loan for our existing customers to meet their short term bonafide requirements. Existing EMI and Bullet Repayment Gold Loan Borrowers who want to avail top up loan against their Gold Ornaments/ Jewellery already pledged with the Bank may avail this facility. Account should not be SMA/NPA. Nature of Facility: Demand Loan (Bullet Repayment) Margin: 50% at the time of sanction of top up gold loan. However, minimum margin of 25% is to be maintained by the customer throughout the tenure in all his gold loans together against the common security. 142  ` Repayment Period: End of Term. Maximum Period is 12 months or currency of the original loan whichever is lower Loan Amount : Min: Rs. 10,000 Maximum: Rs. 10 lacs. The loan amount will be 50% of net of the present Market value of pledged ornaments and security Value required for the existing exposure subject to maximum of Rs.10.00 lacs. Primary Security: NIL Collateral Security: Extension of Pledged Gold Ornaments/ Jewellery in favour of the Bank. Authorised Branches: Branches for which gold retention limit has been approved by the appropriate authority shall only be authorized to handle Gold Loan products. Authorised Officials: Branch Cash Officer or Cash in Charge or any other designated officer/ Award Staff (Senior Special Assistant/ Special Assistant/ Senior Assistant) may be assigned the job of Gold Loan processing by the Branch Head. (Note: All updations/ additions in P Seg Gold loan have been done w.r.t. Master Circ on Gold Loan, Circ No.: R&DB/PBU/CD&e-COM-GL/1/2024 - 25 Date: 07.05.2024) (II) AGRI GOLD LOAN: 1.MC-KCC-GOLD LOAN FOR AGRI PRODUCT 2.MULTI PURPOSE AGRI GOLD LOAN SCHEME (6431-4258 & 6431-4161) 1.MC-KCC-GOLD LOAN FOR AGRI PRODUCT Sl No. Parameter Particulars 1 Product description MC-KCC-GOLD LOAN FOR AGRI PRODUCT 2 Facility Type KCC 3 Product Code Product Code: 6530-1010 4 Eligibility Farmers - individual/ joint borrowers who are owner cultivators. Tenant farmers, oral lessees, sharecroppers and SHG/JLG 5 Purpose To meet the short-term credit requirements for cultivation of crops.  Branch to ascertain the purpose for farm related activities: -  Branch to mandatorily obtain evidence of land record from all borrowers irrespective of loan amount, except tenant farmer/oral lessees & sharecropper who can avail loan limit upto Rs 2.00 Lakhs with self-declaration (Annexure-1A). (For tenant farmer/oral lessees & sharecropper, branch to record the fact in Loan application cum Appraisal). 143  `  Wherever land records are digitized, the same may be verified online too.  This shall be applicable for all category of borrowers (including salaried class, pensioners, Bank staff, businessmen, persons having other income in addition to Agri income, etc.) who is availing gold loan under Agriculture segment and purpose of loan would be towards Agriculture and or Allied activity. 6 Loan Amount Minimum loan: Rs. 1.61 lakh; Maximum Loan: Rs.25 lakh. (a) For farm activity i. Loan availed from non-institutional lenders (for farm activity) = Rs (A) ii. Crop production requirements if any = Rs. (B) (SoF for the crop approved by SLBC) iii. Total loan amount required (A+B) = Rs. (C) iv. Net weight of Gold ornaments X Advance value of Gold ornaments = Rs (D) (As advised by Precious Metal Department, Mumbai) v. The eligible loan amount (Lower of “C” / “D”) (b) For Allied activity i. Loan availed from non-institutional lenders (for allied activity) = Rs (A) ii. Investment credit needs of various Agri Allied activities (Dairy, Poultry, Minor irrigation, Fisheries, etc.) = Rs. (B) iii. Total loan amount required (A+B) = Rs. (C) iv. Net weight of Gold ornaments X Advance value of Gold ornaments = (D) 7 Margin NIL. For crop loans, no separate margin needs to be insisted as the margin is inbuilt while fixing the Scale of Finance (SoF). 8 Interest Rate At present, rate of interest for raising short term crop loan up to Rs.3.00 lakh is charged @7% p.a (fixed) as per Government of India (GoI) directives. Rate of interest for raising short term crop loan above Rs.3.00 lakh is linked to 1- Year MCLR + 3.25% i.e., present effective rate is 10.75%. Overdue loans: Interest is charged at 1-year MCLR +3.25% 9 Interest Subvention It is subject to GoI providing 2% p.a. interest subvention to Bank on such advances. Additional subvention of 3 % p.a. for prompt repayment by the farmers. Thus, the effective interest rate charged to farmers is @ 4 % 144  ` p.a. As per GOI instructions, submission of Adhaar details is mandatory for receiving the benefits of subvention. 10 Security Primary: Hypothecation of crops grown / assets to be created out of bank finance. Collateral: Pledge of gold ornaments. Limit to be compiled based on the crop cultivated, acreage, SOF as decided by the DLTC (or) advance value of the gold ornaments, whichever is lower. 11 Documents  Application cum Appraisal for KCC limit against Gold Ornaments.  Arrangement Letter cum Memorandum for KCC limit against Gold Ornaments  Agreement for Hypothecation of Crops (AB-1)  gold loan Ornaments Take Delivery Letter  Memorandum in respect of Gold Ornaments deposited as security  Gold loan Release letter cum Acknowledgement.  Two Passport Size Photographs.  ID proof such as Driving License / Aadhar Card / Voter Identity Card / Passport, etc. Any one document needs to be submitted.  Address Proof such as Driving License, Aadhar Card, etc.  Proof of landholding duly certified by the revenue 3 authorities.  Cropping pattern (Crops grown) with acreage.  Security document, for loan limit above Rs.1.60 lakh / Rs.3.00 lakh, as applicable. 12 Repayment Maximum 12 (twelve) months from the date of sanction. 13 IRAC NORMS Linked to Crop season. a. A loan granted for short duration crops will be treated as NPA, if the instalment of principal or interest thereon remains overdue for two crop seasons. b. A loan granted for long duration crops will be treated as NPA, if the instalment of principal or interest thereon remains overdue for one crop season. 14 Calling up of After completion of the tenure of the Agri Gold Loan (12 Advance Months). First Notice - A letter will be sent to the borrower as per Annexure -14, SIM-GL/7 of the Master Circ for Agri Gold Loans. Final Notice- If the account is not regularised within 15 days, a final notice (Annexure 15) through “Registered Post” to be sent to the borrower that the relative ornaments will be sold by public auction without further reference if the loan account is not closed within 15 days from the date of final notice. The total auction process should be completed in 45 days from due date of payment by issuing first and final notices 15 Processing / Limits above Rs.1.61 lakh to Rs.3.00 lakh – Rs.250+GST Inspection and other Limits above Rs.3 lakh - 0.30% of the loan amount +GST. 145  ` charges Processing and inspection charges in case of loan to SHG/JLG is waived for Rs. 25,000/- per member. 16 Prepayment penalty NIL 17 Penal Interest 2% p.a. above the normal rate for the defaulted amount for the period of default. 18 End Use of the fund The post-sanction visit would be done as follows: - 1. Borrower having other farm loan: -  Branches during regular field visits should ensure that, the borrowers are continuously carrying out Agri activity as mentioned in the loan applications. They should record their observations in the inspection report. A comprehensive inspection report will be compiled covering all activities/ loans, including Agri gold Loan. 2. Borrower having only Agri Gold Loan: -  Branches are advised to conduct post sanction inspection and compile a report. The report must be kept on branch record. Further, at Circles where bank has engaged services of geospatial service provider, branch should invariably use services of such service providers and keep a copy of the report on record. 19 Other Conditions The interest subvention will be available, subject to the aggregate limits sanctioned up to RS.3 lakh to the customer under KCC and KCC (AH&F).  The KCC accounts are subject to periodical review, annually.  Please ensure pre-and post-sanction inspection for end use of funds.  The features of the product as provided above and all other terms and conditions in respect of loans under KCC Crop scheme apply mutatis mutandis. (Please refer to revised KCC master Circ No. 979/2021 – 22 dated 28.12.2021) 20 Discretionary Power As per the delegation of financial power. 21 Advance Value As applicable to MPGL Agri  Loan to Value Please refer to the Circ Sl No 360/2022-23 dated  Purity testing 24.06.2022 for Standard Operating Procedure for Agri Gold  Weight of the gold Loan. ornaments  Gold Appraiser Charges 146  ` Multi purpose Agri Gold Loan (Facility: Demand Loan) Sl no Particulars Details 1 Product Multi-Purpose Agri gold loan Scheme (Non-Interest Subvention) 2 Repayment period 12 months from the date of disbursement of the loan. 3 Credit Facility MPGL - Demand Loan 4 Los Mandatory including online submission of control forms 5 Purpose To meet the short-term production / investment credit needs of :- the farmers, engaged in agriculture, cultivating own and /or leased land or engaged in cultivation of crops Farmers in allied activities like Dairy, Poultry, Fisheries, Piggery, Sheep, etc. entrepreneurs and famers who needs investment credit for acquiring farm machinery, undertaking land development, irrigation, horticulture, transportation of Agri produce, etc. All other farming activities which are permitted to be classified under agriculture as per RBI/GoI/NABARD guidelines and not covered under the Agri Interest subvention scheme. 6 Eligibility All farmers: Individuals who are owner cultivators, Agri entrepreneurs. Tenant farmers, Oral lessees & Sharecroppers Any person engaged in any agriculture or allied activities and wants to repay loans availed from non-institutional lenders as well as persons engaged in activities permitted by RBI to be classified under agriculture. In case to repay loans availed from non-institutional lenders, a self- declaration has to be obtained from the applicant that he/she is engaged in Agri and allied activities and that the loan availed against the pledge of Gold ornaments is for repayment of higher interest rate loans availed from non – institutional lenders. KYC compliance is mandatory. Loan can be granted against the security of specially minted gold coins sold by SBI/e-ABs weighing up to 50 grams per customer only. Branch to ascertain the purpose: - a. Borrowers applying for farm related activities: -  Branch to mandatorily obtain evidence of land record from all borrowers irrespective of loan amount, except tenant farmer/oral lessees & sharecropper who can avail loan limit upto Rs 2.00 Lakhs with self-declaration (Annexure-1A). (For 147  ` tenant farmer/oral lessees & sharecropper, branch to record the fact in Loan application cum Appraisal).  Wherever land records are digitized, the same may be verified online too.  This shall be applicable for all category of borrowers (including salaried class, pensioners, Bank staff, businessmen, persons having other income in addition to Agri income, etc.) who is availing gold loan under Agriculture segment and purpose of loan would be towards Agriculture and or Allied activity. b. Borrowers applying for allied activities: -  Branch to make a discreet enquiry about eligible allied activity to be carried out and document the same in loan application/declaration & same must be kept on branch record. Applicant should be a resident of an area not exceeding 25 to 30 Kms from the branch. However, it is not applicable to existing customers and the applicant from the non-banked areas. (refer e-Cir Sl.No. 721/2019-20 dated 26.08.2019) 7 Gold loan release “Gold Loan Release Letter cum Acknowledgement” is letter cum generated at the time of opening of gold loan account and it acknowledgement should be kept with loan document. An acknowledgement for receipt of Gold ornaments at the time of delivery has to be obtained from the borrower and same has to be preserved for 10 years for audit purpose. (SIM GL 10) Annexure -9. (Cir sl no 989/2019-20 dated 18.10.19) 8 Advance Value As advised by Precious Metal Department, Corporate Centre, Mumbai, from time to time. Advance value of the gold is made available by Precious Metal Department vide e-Circ whenever a change is advised. 9 Loan to Value  Loan sanctioned against pledge of gold ornaments and jewellery should not exceed 75% of the current value of gold ornaments and jewellery at the time of sanctioning Agri Gold Loan. After this, the total outstanding in Agri Gold Loan account plus accrued interest should not exceed 90% of current value of gold ornaments and jewellery pledged to the Bank. The current advance value of gold as advised by Precious Metal Department shall be used for this purpose. Once the LTV 90% is breached, borrower to be advised to top up/bring LTV within 90%. Branches must be meticulous in recovering the amount in excess of 90% LTV by contacting the 148  ` borrower.  On the day when LTV is above 90%, 1st notice is to be sent by registered post with acknowledgement to regularize the loan account within 15 days. Final Notice: If the loan account is not regularized within 15 days, a final notice must be sent by registered post with acknowledgement due to the borrower advising that the relative gold ornaments shall be sold by public auction without further reference, if the loan account is not closed, within 30 days from the date of Final notice. The total auction process should be completed in 45 days from date of final notice.  Branches should ensure that Agri Gold Loans doesn’t breach LTV ratio and for this purpose, branches can use LTV Dashboard available in Loans & Advances Dashboard. Path for LTV Dash board : MIS Online > Loans & Advances Dashboard > Other Dashboards >Gold Loan LTV Monitoring 10 Assessment and All the branches authorised to handle Gold loans should have Security valuation approved Gold Appraisers linked to the branches. Minimum two Gold Appraisers should be linked to each branch and branches shall allot work to appraisers on random basis. Assessment of gold ornaments should be done by Cash Officer / Cash in Charge. However, the responsibility towards the quality/purity of gold ornaments rests with Cash Officer / Cash in Charge. The responsibility for Weight & no of items of ornaments rest with Joint custodian. In this regard, it has been decided to place the following business rules with respect to sanction of agri gold loans :-  For loans up to Rs. 50,000/- assessment by empanelled Gold Appraiser is optional. (Loans upto Rs.1,00,000/- in case of four circles i.e., Amaravati, Chennai, Hyderabad and Thiruvananthapuram Circles)  For loans above Rs 50,000/- but below Rs.5 lacs, ornaments are to be assessed by Minimum one approved gold appraiser, for its quality and value before accepting them for pledge. (However, for Amaravati, Chennai,  Hyderabad and Thiruvananthapuram Circles, assessment by min. one appraiser is compulsory for loans above Rs 1,00,000)  Gold loan accounts with limits Rs. 5 lacs and above should be appraised by two empanelled appraisers mandatorily. 11 Purity Testing It is pertinent to reiterate that the primary responsibility for 149 ` testing the purity of gold ornaments rest with the cash officer / cash -in-charge of the branch. Branches should engage the services of approved Gold Appraisers to test the purity of gold ornaments for loan above Rs. 50,000/- (Amaravati, Chennai, Hyderabad and Thiruvananthapuram Rs.1.00 lakh). Branch Cash Officer / Cash in Charge (Special Assistant / Senior Assistant in charge of cash) is responsible for ensuing genuineness and purity of gold ornaments by using the following purity testing methods: a. Touch Stone Method: Under this method, the gold ornaments are rubbed against the touchstone and the impression is compared with the impression of the standard gold. b. Nitric Acid Test Method: Nitric Acid when applied on pure gold makes no impression/reaction. Few drops of nitric acid are to be dropped on the ornaments and reaction is to be observed. Simultaneously, few drops of acid should be dropped on the impression of gold on touchstone and reaction, if any, observed. If the nature of the smear remains unaltered the ornament is said to be made of pure gold. But if there is a reaction and fumes, followed by foam are more, it indicates that the metal is spurious. Nitric acid turns inferior gold into coppery colour. The degree of discoloration varies as per the metal used for the alloy. c. Specific Gravity Test Method: The method is applied to ornaments purportedly made from solid gold with no extraneous matter, such as precious or semi-precious stones etc. The following steps should be followed. (i) Weight of the ornaments in air (say ‘X’) (ii) Weight of the ornaments in water (say ‘Y’) (iii) Apply the following formulae: (Specific Gravity of 24 carat gold is 19.3) 19.3 = X/ (X-Y) Y = X (19.3-1) / (19.3) If the weight in water (Y) is less than the result indicated above, it proves that the ornaments are not made of solid gold but contains some base metal. If necessary, Cash Officer /Cash in Chargers should utilize the services of a reputed jeweller to verify the genuineness of gold ornaments in his presence at the cost of borrower. In case the 150 ` services of a local gold smith are employed, the certificate of purity and mass of gold should be obtained. d.Assaying Machines: Since the accuracy in assessing the purity of gold ornaments assumes great importance in determining the loan amount as also to prevent finance against low quality /spurious gold ornaments, gold assaying machines (karat meter) have been supplied to select branches based on the potential of gold loan business for assessing the quality of gold ornaments. The machine is not a substitute to traditional methods of testing purity of gold but a supplement to assess the purity of gold ornaments. The use of machines will act as deterrent to the people pledging low quality /spurious gold ornaments. The usage of testing machine may initially consume more time but the member of staff picks up speed once they are acquainted with the procedure. b. Sanctioning against Bangles / Kadas Branches should exercise caution/vigilant while accepting Bangles / Kadas for pledge for sanctioning of the gold loan. Specific gravity method should be invariably adopted for assaying the purity of ornaments of this nature.  Ornaments bearing initials/marks: while accepting gold ornaments bearing names, initials, or other marks, which are prima facie, not those of the borrowers, Cash Officer / Cash in Charge should satisfy himself / herself through discrete enquiries that the borrowers have full title to the ornaments despite existence of initials or marks thereon. In addition, letter confirming the ownership of the borrowers and furnishing reasons for such description should be obtained from them, a note to this effect made against the relative accounts in the gold loan ledgers. Request for loan should be tactfully denied in case there is even the slightest doubt regarding the ownership of the ornaments.  Hallmarking: Hall marking as defined by the BIS, is the accurate determination and official recording of the proportionate content of precious metal in bullion articles. Hallmarks are thus official marks used in many countries as a guarantee of purity or fineness of precious metal articles. The objectives of the Hallmarking scheme are to protect the public against adulteration and to obligate manufacturers to maintain legal standards of fineness. 151  ` = Rs (A) ii. Crop production requirements if any = Rs. (B) (SoF for the crop approved by SLBC) iii. Total loan amount required (A+B) = Rs. (C) iv. Net weight of Gold ornaments X Advance value of Gold ornaments = Rs (D) (As advised by Precious Metal Department, Mumbai) v. The eligible loan amount (Lower of “C” / “D”) (b) For Allied activity i. Loan availed from non-institutional lenders (for allied activity) = Rs (A) ii. Investment credit needs of various Agri Allied activities (Dairy, Poultry, Minor irrigation, Fisheries,etc.) = Rs. (B) iii. Total loan amount required (A+B) = Rs. (C) iv. Net weight of Gold ornaments X Advance value of Gold ornaments = (D) (As advised by Precious Metal Department, Mumbai) (V) The eligible loan amount (Lower of “C” / “D”)  Accounts in single CIF - Aggregate limit of the gold loans to a single borrower/ CIF should be restricted to Rs.25.00 lakh. Number of gold loans, exceeding five accounts per borrower / CIF, should be referred to the next higher authority for approval before sanction. Aggregate gold loan limit sanctioned per borrower / CIF should be within the financial power of the Sanctioning Authority. In case of existing Agri gold loans more than 5 accounts per borrower / CIF efforts to be made to restrict to 5 gold loans. 14 Penal Charges 2% p.a. for the defaulted portion for the period of default. 15 Pre-payment NIL penalty 16 Gold Appraiser RUSU branches: Gold appraiser charges at @0.05% to 0.10% Charges of loan amount with a minimum of Rs.50/- and maximum of Rs.300/- URMET branches: Gold appraiser charges at @0.05% to 0.10% of loan amount with a minimum of Rs.50/- and maximum of Rs.600/- The appraiser fee should be paid by Gold loan borrower from his SB a/c to the Gold Appraiser’s SB/CA a/c in all such cases where engagement of gold appraiser has been completed in accordance with instructions issued in this regard. CMC of the Circles have the discretion to fix the gold appraiser charges within the range stipulated above as deemed necessary depending upon the competition prevailing to their 153  ` area of operation. 17 Documentation Application, appraisal, and Acknowledgement letter: SIMGL/1  Two copies of photograph of the borrower  Gold Ornaments Take Delivery Letter (Annexure-4)  DP Note and DP Note Take Delivery Letter  Witness letter in case of illiterate borrowers (Annexure-6)  Memorandum in respect of Gold ornament(s) deposited as security (SIM-GL/9) (signed by customer alongwith branch officials to be placed inside the bag) (Annexure-5)  Acknowledgement of the ornaments offered as security for the loan (issued to the borrower) (SIM-GL / 9: Annexure –11) 18 Disbursement To SB accounts only. No disbursement in cash/ to KCC accounts Service area: Applicant should be a resident of an area within a range of 25 to 30 Kms from the branch. However, the stipulation is not applicable for the existing customers and the applicant from the non-banked areas. Surprise Verification: The surprise verification of gold ornaments, pledged under the scheme, at random basis (30% ornaments or maximum of 100 goldloan accounts whichever is less) has to be conducted at Quarterly intervals by an officer other than Joint Custodian to prevent frauds. Spurt in Agri Gold loan portfolio- Controllers should arrange for re-verification of gold loans immediately when noticed a sudden spurt in the branch gold loan portfolio for ensuring the quality and value of ornaments and compliance of systems and procedures while sanctioning / disbursing loans. Purpose: 1. To meet the short-term production / investment credit needs of the farmers, engaged in agriculture, cultivating own and /or leased land or engaged in cultivation of crops. 2. Farmers in allied activities like Dairy, Poultry, Fisheries, Piggery, Sheep, etc. 3. entrepreneurs and famers who needs investment credit for acquiring farm machinery, undertaking land development, irrigation, horticulture, transportation of Agri produce, etc. 4. All other farming activities which are permitted to be classified under agriculture as per RBI/GoI/NABARD guidelines Eligibility: All farmers: Individuals who are owner cultivators, Agri entrepreneurs. Tenant farmers, Oral lessees & Sharecroppers, any person engaged in any agriculture or allied activities and wants to repay loans availed from non-institutional lenders as well as persons engaged in activities permitted by RBI to be classified under agriculture. a self- declaration has to be obtained from the applicant that he/she is engaged in Agri and allied activities and that the loan availed against the pledge of gold 154 ` ornaments is for repayment of higher interest rate loans availed from non – institutional lenders. PART DELIVERY OF ORNAMENTS: On written request of the borrower, part delivery of ornaments may be given against part repayment of the loan, provided the advance value of the ornaments still in the Bank’s possession fully cover the outstanding in the account including required margin. The borrower’s acknowledgement for receipt of ornaments delivered to him should be obtained in the Gold Loan Ledger. (III) SME GOLD LOAN: Brief features of SME Gold Loan product: 1. Finance to existing MSME Units (only proprietorship firm) against gold ornaments/ jewellery belonging to Proprietor for meeting general business purpose 2. Limit > Rs.1 lac to Rs. 50 lacs 3. No requirement of Balance Sheet and other financial documents 4. Simple assessment based on advance value of gold and estimated sales Target Group & Eligibility: MSME Units (Proprietorship Firm only) who want to avail loan against Gold Ornaments/ Jewelry (Existing/ New). Unit/ Shop shall be with running activity. Existing borrowers having Working Capital arrangement with other Banks should not be considered. Purpose: To provide hassle free financial assistance to existing MSME units (Proprietorship Firm only) against Gold Ornaments/ Jewelry held in the name of Proprietor, for fund-based requirements for general business purpose. No loans should be granted against Gold Bar/Bullion Nature of Facility: Overdraft (OD) / Demand Loan (DL) Repayment Period: Overdraft: Max. 12 months. Repayable on demand. Interest to be serviced on monthly intervals as and when applied. Demand Loan: Max. 36 months subject to review after every 12 months. Repayable in Equated Monthly Instalments (EMIs). Repayable in part payment or bullet repayment any time before maturity. Interest is to be serviced at monthly intervals. No Renewal under Demand Loan. Fresh Sanction to be done after repayment of Loan. 155