Gold Loan Fraud of Rs. 1.24 crore in PSU Bank

A significant gold loan fraud case was recently discovered at the Bank of India. In the Bank of India branch in Saraidhela, 28 individuals turned in 3.5 kg of phony gold in exchange for a Rs. 1.24 crore bank loan. A police report has been made against the business correspondent, gold valuer, and borrowers who were complicit in this fraud.

The accounts turned non-performing and the gold secured by the loan was revalued, which is when the issue was discovered. The fact that the gold being held in safe custody was counterfeit stunned the branch officers. Vishwa Pratap Singh, the senior branch manager, filed a police report at the Saraidhela station.

From January 2022 to January 2023, loans were made secured by counterfeit jewelry. Loan accounts quickly became non-performing assets (NPAs) due to non-payment by borrowers. The bank sent notifications to the loan holders to collect the unpaid balance in response to the circumstances. The loan holders received notice that if the installments were not deposited, their jewels would be put up for auction. When the loan holders ignored the notices, though, bank officials were taken aback.

In order to open the sealed packages containing the mortgaged valuables, a committee was established. The jewelry was reassessed and a video was completed. Reassessment revealed that the jewelry was, in fact, phony.

In March, the Reserve Bank of India had asked banks to share with it information on frauds reported in gold loans, actions taken by them to recover the money and defaults in the portfolio.

The RBI also asked banks to review their lending processes to check if they are in compliance with the regulator’s gold loan guidelines. The RBI sought this information after it found that employees of two state-run banks manipulated its system to meet gold loan targets.