Finance Minister Nirmala Sitharaman has assured that strict action will be taken if banks and Non-Banking Financial Companies (NBFCs) violate the well-defined processes for auctioning gold when borrowers fail to repay their loans.
She made this statement during the Question Hour in the Lok Sabha while addressing concerns regarding gold loan auctions.
The finance minister emphasised that both Scheduled Commercial Banks (SCBs) and NBFCs operate under similar guidelines when dealing with gold loans.
She explained that there are strict procedures in place to ensure that borrowers are given multiple notices before any action is taken. If a borrower does not repay the loan despite repeated reminders, the lender is left with no choice but to conduct an auction.
Sitharaman stressed that even during auctions, financial institutions must adhere to stringent norms. She assured that any deviation from these procedures would prompt government intervention. She also expressed her willingness to investigate specific cases where violations of these norms are reported.
Her response came after DMK leader Kanimozhi Karunanidhi raised concerns over gold auctions conducted by lenders in cases of default.
Addressing a question from Congress leader Manish Tewari, Sitharaman also spoke about the demand for gold in India. She noted that the demand has not declined but continues to rise.
She highlighted that Indian households, small businesses, and women continue to see gold as a secure and liquid asset. She acknowledged that gold remains a preferred investment option, reflecting its cultural and financial significance in the country.
The discussion in the Lok Sabha highlighted the importance of ensuring fairness in gold loan auctions while also recognising gold’s continued relevance in Indian society. Sitharaman reassured that necessary actions would be taken against any violations of the established procedures.
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