Gold Auction Process

• Notice period: Before the auction, a gold auction notice is issued, giving enough time for the borrower and potential buyers to prepare.
• Valuation of gold: The gold pledged is evaluated based on purity and weight, which determines its reserve price for the auction.
• Bidding process: The auction can either be conducted physically or online. Participants place bids based on the market price of gold.
• Minimum bid: The minimum bid is usually set by the lender to recover the loan amount.
• Payment terms: The highest bidder is required to make full payment within a stipulated period.
• Gold auction today: Always check for live updates or upcoming auctions to stay informed.

Following these gold loan auction rules ensures smooth and transparent transactions, protecting the interests of all parties involved.

Appointment of auctioneer for gold auction

The auction shall be conducted by auctioneer, as per the following guidelines: 

• Applications will be invited for empanelment as Auctioneer from established and reputed auctioneer/ auctioning agencies;
• Applications will be screened and the auctioneers will be selected; 

The auction may also be conducted by BFL employees having necessary experience
 

Role of auctioneer in gold auction

The auctioneer will act as a facilitator to enable smooth functioning of auctioning process by performing the below role:

• The auctioneer is responsible for the conduct of auction in a fair and transparent manner.
• The auctioneer to ensure that the bidder submits duly filled in application forms along with earnest money deposit in accordance with auction terms.  
• The auctioneer will encourage competitive bidding and ensure that the bid value is as per prevailing regulatory norms.
 

Place of auction for gold auction

The first auction shall be physically conducted in the  same district in which the branch that has extended the loan is located. In case of failure of first auction, subsequent auction may be conducted in same district or adjoining district or through online mode.

Facilities at gold auction centre

To ensure a smooth and efficient auction, centres should have enough staff, the necessary equipment, and appropriate infrastructure. To ensure a smooth and efficient auction:
 

• Necessary equipment: Weighing machines and, if needed, purity analysers.
• Secure storage: A safe or strong room for storing gold.
• Proper documentation: All necessary registers and document formats.
• Essential personnel: A nominated person from Recovery, Operations, Credit, or Audit present during the auction.
   

Understanding gold loan default and auction process

Any one of the following events or situations, or a combination of them, will be considered an event of default:

• If the Borrower fails to pay the Outstanding Dues on or before the Due Date or commits breach of any of the terms, covenants or conditions contained in the gold loan documents
• If the required margin is not maintained; it should be ensured that BFL must be covered fully in value of collateral offered by the Borrower for the principal and the accumulated interest, and one of the triggers would be where the margin falls below 15%
• If the gold collateral deposited is found to be fake, defective, stolen, spurious or of an inferior quality
• If the Borrower commits an act of insolvency or if the Borrower is adjudged or declared insolvent or bankrupt or if a liquidator, receiver or official assignee is appointed in respect of any property or estate of the Borrower
• If the Lender, for any regulatory or other reasons, is unable or unwilling to continue the Loan
• If the Borrower defaults in payment of any other loan with the Lender or any other creditors
• If any representations or statements or particulars provided in the Application Form and/or under the Loan Documents are found to be false, misleading or incorrect

• If there exist any circumstances which in the opinion of the Lender jeopardizes the Lender’s interest

  
  

The auction process involves following steps:
 

i. Communication to borrower in case of default

a. A default Notice will be served on the Borrower(s) at the address as mentioned in the Loan Application Form or any such subsequent change in address, as may be intimated to BFL by the Borrower(s), after default from the scheduled repayment due date of the Loan or interest payment date, as the case may be. Default notices are sent to customers post minimum 15 days from maturity through speed / registered post.

b. If the Borrower(s) fails to repay the dues despite serving above mentioned Notices an ‘Auction Intimation Notice’ will be served after expiry of 21 Days from the date of issuance of the Default Notice which will explicitly inform the Borrower about auction of the pledged gold collateral of the Borrower.
 

ii. Communication to borrower in case of margin breach

a. In case of shortfall in the margin due to downward fluctuations in the rate of gold interest or upward movement in the rate of interest, or in case the gold collateral is found to be of fake, defective, spurious or of an inferior quality during internal checks the borrower shall be communicated to make good of such shortfall in margin within 3 days of occurrence of the shortfall, and such communication by BFL shall be given through various means of communications.

b. if the Borrower fails to settle the dues within specified period as mentioned in the Intimation Notice mentioned above, the ‘Auction Intimation Notice’ will be served within four (4) days of issuance of the Intimation Notice informing the Borrower about initiation of auction of the pledged gold collateral.

‘Auction Intimation Notice’ is served to realize any and all amounts outstanding under the Loan along with incidental expenses which will include all the costs/expenses (e.g. auction expenses, legal expenses, taxes, etc.) and the shortfall connected therewith. Also, the ‘Auction Intimation Notice’ will explicitly mention that in the event the realized value is not sufficient to discharge the outstanding under the Loan as mentioned hereinabove, BFL will initiate appropriate legal proceedings against the Borrower.
 

The Auction Intimation Notice shall mention the date, time and place of the auction.

The said notice(s) mentioned herein above will be sent to the Borrower(s) through India Post or by Courier with proof of dispatch. 

Note: For all notices sent by BFL through India Post, in case the acknowledgement is not received is not returned by the postal authority, it will be assumed that the notice is deemed to be served on the addressee within 4 (four) days from the date of dispatch.

iii. Advertisement for conducting auction for due date breach cases:

Auction Notice for the auction of the gold collateral will be published in two newspapers i.e. one in the local newspaper in vernacular language and another in a national daily newspaper, about the proposed auction sale of the pledged gold collateral.  Auction Notice should inter alia: 

(a) include a clear mention about the date, time and place of proposed auction; the loan number material terms and conditions of the auction sale.    
(b)  specify that the sale of pledged gold collateral is on an “as is where is basis”;
(c)  state that BFL reserves the right to refuse any or all bids and/or to defer/withdraw the auction without assigning any reason to the bidders at any time during the process of the auction sale; and
(d) mention that, in the absence/failure/cancellation of public auction sale, BFL may, at the instance of the Borrower(s) also reserve its right to sell the pledged gold collateral through private sale. 
 

If BFL cannot trace the borrower or legal heirs despite best efforts and a public notice, it will proceed with auction after one month from date of public notice.
 

iv. Guidelines to conduct auction: 

The auction shall be conducted, as under:
 

• The pledged gold collateral will be displayed to auctioneers as per the pre-approved terms and conditions.
• BFL or its On Roll employees shall NOT bid in the auction held.
• BFL or its related parties shall not participate in the auctions to ensure that there is no potential conflict of interest.
• BFL will fix a minimum amount to be recovered from the bidding of each pledge based on the valuation of gold collateral. Recoverable amount includes the principal and interest outstanding under the Loan as well as all the costs, expenses including notice and auction expenses and shortfall connected therewith.
• BFL shall declare a reserve price for the gold collateral at the time of auction, which shall not be less than 85 per cent of the previous 30 day average closing price of 22 carat gold as declared by Indian Bullion and Jewelers Association Ltd (IBJA)
• While conducting the auction BFL’s official should endeavour to realize the full market value for gold collateral pledged on the day of auction. BFL’s branch staff shall satisfy themselves with the identity of the bidders participating in the auction by collecting their KYC documents for gold loan (e.g. PAN Card, Driving License, etc.). 
• All participants of the Bid will have to pay certain amount (as may be decided on case to case basis) as Earnest Money Deposit (EMD). EMD to be refunded to bidders in case of unsuccessful bid.within 7 working days.
• Surprise visits will be conducted by regional/ controlling officials on periodic basis, coverage under internal audit, etc. for controls and process adherence.
   

The sale shall be concluded in favor of the highest bidder. 

v. Documentation of auction event:

The auction process shall be documented by recording chronologically as per the steps given below and such details of the auction shall be kept on record.
a) A summary of the auction proceedings.
b) Name of the highest bidder.
c) Amount realized.
d) Delivery of the gold collateral to the respective successful bidder; and
e) The occurrence of the above proceedings shall be recorded and signed by the concerned authorized official of BFL. 
 

vi. Delivery of gold collateral: 

The successful bidder has to take delivery of gold collateral within three (3) working days from the date of auction by depositing the balance amount of the bid. The balance amount of the bid should be paid preferably by way of bank-to-bank transfer to BFL. The purchase receipt should be obtained from each of the successful bidders after full payment and at the time of delivery of the gold collateral. In the event of a successful bidder failing to comply with the payment terms, the Earnest Money Deposit of such bidder shall be forfeited as per the auction terms and conditions and BFL shall be at liberty to sell the pledged gold collateral by way of public/private sale at its discretion. 

In case of a private sale at the instance of Borrower(s), to ensure transparency, BFL, may invite offers from local jewelers/interested person for each item or in smaller lots.

vii. Loan adjustment: 

The auction sale proceeds should be adjusted against the account of the Borrower opened with BFL in relation to the Loan (“Loan Account”) and if the sale proceeds are less than the total dues, BFL shall immediately serve on the Borrower a demand notice for recovery of the balance dues. The surplus, if any, from the auction of the gold collateral, shall be refunded to the borrower(s)/ legal heir(s) within a maximum period of seven working days from the date of receipt of the full auction proceeds
 

viii. Communication to the borrower: 

After completion of auction sale proceedings, the concerned BFL Branch shall inform/intimate the Borrower(s) about the auction sale by way of a letter giving therein the following details:

a) Amount received from bidder(s) by way of auction sale; 
b) Surplus or deficit in the Loan Account after crediting the auction sale proceeds; 
c) Further recovery action to be initiated for deficit/ shortfall in the Loan Account which the Borrower(s) is supposed to make good;
d) Auction Hold
e) Auction can be deferred but not necessarily basis below instances.
 

a. Customer has paid 50% or more of his outstanding.
b. There is a notification sent by government authorities to maintain status Quo.
c. In case there is a legal proceeding involving the customer/ Loan.
d. In case of any other instances with approval of DGM and above – Gold loan 
 

Details of Accounts scheduled for auction in April’26 for loan against gold jewellery