ANDHRA PRAGATHI GRAMEENA BANK HEAD OFFICE :: KADAPA ADVANCES AGAINST SECURITY OF GOLD ORNAMENTS COMPREHENSIVE GUIDELINES

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1 ANDHRA PRAGATHI GRAMEENA BANK HEAD OFFICE :: KADAPA Circular No BC-CD Date: ADVANCES AGAINST SECURITY OF GOLD ORNAMENTS COMPREHENSIVE GUIDELINES Attention of Branches and Regional Offices is invited to the captioned subject. The Bank had earlier issued guidelines on granting of loans under various Jewel Loan schemes and the level of advances under Jewel loan portfolio is on increase every year. With a view to make available various guidelines applicable to different types of Jewel Loan schemes, appointment of Jewel Appraisers, auctioning of jewels etc., to Branches/Regional Offices at one place, it is felt necessary to issue comprehensive guidelines covering all the aspects relating to Jewel loan schemes as under. 1. BROAD CLASSIFICATION: Advances against the security of gold ornaments including gold coins are classified under the following heads. (A) Pragathi Agri Gold Loan scheme {JL (Ag.)} (B) Pragathi General Gold Loan scheme {JL (Gen.)} (C) Pragathi Swarna Credit Card scheme. (D) Staff Jewel Loan scheme as applicable to public {JL (staff)} 2. ELIGIBILITY (A) Jewel loans shall be sanctioned to the customers, whose SB / Current accounts are opened as per KYC norms. (B) Jewel loans shall be sanctioned only by those Branches which are having the services of approved Jewel Appraiser. (C) The applicant seeking Jewel Loan for agricultural purpose should be an agriculturist, cultivating the lands. Such loans shall be classified under Pragathi Agri Gold Loan scheme {JL (Ag.)} Priority Sector. (D) The applicant seeking Jewel loan for other than agricultural purpose should specifically mention the purpose of the loan in the loan application. Such loans shall be classified under Pragathi General Gold Loan scheme {JL(Gen.)} / Swarna Credit Card scheme Non Priority Sector. (D) Jewel loans can be sanctioned to confirmed Officers and Employees of the Bank as per the eligibility under the scheme. Such loans shall be classified under Jewel Loan (Staff) Non-Priority Sector. Jewel Loans should not be sanctioned for speculative purposes. Contd.2

2 Circular No BC-CD Date: LOAN LIMIT : 2 : (A) The loan/limit shall be fixed keeping in view the scale of finance(for crop production purpose), purpose of the loan(for other purposes), weight and purity of the gold, per gram lending rate/margin applicable to different types of jewel loan loan schemes as communicated by the Head Office from time to time. (B) The maximum amount of the loan that can be sanctioned to staff members under Staff Jewel loan scheme of the Bank is Rs.25000/- The per gram lending rate as applicable to JL(Gen.)shall be adopted while sanctioning Staff Jewel loans. (C) The loan/limit sanctioned shall be within the discretionary powers of the Sanctioning Authority as communicated by the Head Office from time to time 4. SECURITY (A) The loan shall be arranged against the security of gold ornaments / gold coins of adequate value as per the norms in force from time to time. (B) No other security including the asset created out of the proceeds of Jewel Loan need be insisted. 5. RATE OF INTEREST The rate of interest shall be as stipulated from time-to-time on respective Jewel loan schemes. The rate of interest on staff Jewel loans shall be as applicable to public on Jewel loans (Gen.) and compounded on monthly basis. 6. REPAYMENT A) Jewel loans (Ag.) As applicable to PKCC scheme. B) Jewel loans (Gen.) The principal along with interest shall be repayable in 2 years from the date of arranging the loan. Interest shall be compounded on monthly basis. C) Pragathi Swarna Credit Card: Valid for 2 years from the date of arranging the facility. Interest shall be compounded on monthly basis. D) Staff Jewel Loans: The loan together with interest thereon shall be repayable in not more than 36 Equated Monthly Instalments and the loan instalment shall be recovered from the salary every month. Contd.3

3 7. SANCTIONING POWERS : 3 : Circular No BC-CD Date: The per party sanctioning powers communicated from time to time shall be strictly adhered to. The present per party sanctioning powers of the Branch Managers for sanction of all types of Jewel loans put together as per circular No BC-CD dt are as under. (Rs. in lakhs) Branch Managers SCALE III SCALE II SCALE I The Jewel loans sanctioned to a party under different types of Jewel loans put together shall not exceed the per party sanctioning powers communicated from time to time. Sanctioning of too many Jewel loans to a single party shall be discouraged so as to avoid incidence of frauds. Wherever, more than one Jewel loan is sanctioned to a single party, liability register shall be maintained / so as to ensure that the per party limit is not exceeded. Branch Manager is the Sanctioning Authority for sanctioning staff Jewel loans upto Rs.25000/-under the scheme. 8. GENERAL GUIDELINES The general guidelines applicable to all types of Jewel loans are as follows: Whom to Advance: Jewel loans should be arranged only to the customers of the Bank who are having SB / Current A/c with the Branch and are properly introduced by following KYC norms. (A) Loans to Jewel Appraiser or his relatives: No Jewel loan shall be sanctioned to Bank's Jewel Appraiser or to his relatives or to persons introduced by him, unless the jewels proposed to be pledged are independently appraised by other approved Jewel Appraiser under information to Regional Office. (C) Satisfying as to the Ownership: The Branch Manager shall satisfy himself that the party pledging the jewels is the true owner of the jewels. Some of the illustrative check points are furnished below: Contd.4

4 Circular No BC-CD Date: : 4 : i) If the general appearance of the borrower is quite incompatible with the value or type of the jewels brought, eg., a man looking poor bringing jewels of considerable value should raise suspicion. ii) If the jewels worn generally by a particular community are brought for pledging by persons of another community eg. jewels worn by Muslims are brought by Hindus and vice versa. iii) Temple Jewels are being brought by individuals for pledging. iv) Ornaments on which names of persons other than those of the borrower are inscribed shall not be accepted for pledge. v) When the behaviour of the borrower is suspicious. vi) When the borrower objects to a thorough examination of the jewels. vii) When the borrower is a temporary immigrant. 9. APPRAISAL OF JEWELS (A) When the head of the branch is satisfied regarding the ownership of jewels, he / she shall get the jewels appraised by the Jewel Appraiser appointed by the Bank. (B) Appraisal by the Jewel Appraiser: The jewels should be got appraised and all purity tests such as touch stone test, acid test etc. should be done by the Jewel Appraiser in the presence of the Manager in the branch premises itself and under no circumstances, the jewels should be sent to the Jewel Appraiser's place for appraising, for the purpose of granting Jewel loans. (C) Whenever the appointed Jewel Appraiser is out of station: Whenever the appointed Jewel Appraiser is out of station, the jewels may be got appraised by the appointed Jewel Appraiser of nearby Branch. (D) Appraisal Procedure: It is not possible to lay down any fool-proof method of testing the genuineness of gold and gold ornaments and this skill shall have to be developed by constant practice and experience. Broad guidelines, however, are indicated below for guidance. i) Touchstone Test: Gold/ornaments shall be rubbed on a touchstone. The gloss and colour of gold are distinct from those of their base or alloy metals and should, by experience, be noticed. Rubbing on the touchstone will also disclose any spurious substance inside, if the ornaments are merely coated with gold lining/plating. Contd.5

5 : 5 : Circular No BC-CD Date: ii) Nitric Acid Test: Nitric Acid does not make any impression on pure gold. Its effect on sovereign gold is very little; but on gold of inferior quality, its reaction is discoloration of the metal to coppery red. The extent of discoloration depends on the proportion of the alloy. The discoloration will vary according to the metal used for the alloy. A drop of nitric acid, from the bottle container by a glass rod or tube put on the touchstone on which gold ornament is rubbed, or even on the ornament itself will disclose the genuineness or otherwise of the gold content of the ornaments. iii) Test by Filing: In the case of jewels coated with a thick lining of gold, application of a triangular file or a small deep scratch created by a pen knife will expose the inner contents. The particles of the alloy will be seen spilling out of the cavity so created. Nitric acid test described above should then be applied on the cavity. Touch stone at a cost upto Rs.200/- and Nitric acid at reasonable rate can be purchased by Branches exclusively for their use and the expenditure can be debited to General Charges - Contingencies a/c. The Nitric Acid shall be changed once in 2 months. iv) Items to be excluded during appraisal: i) Precious Stones: Indian ornaments, often contain precious stones. In several instances, such stones fetch more value than gold. But as a matter of policy, all types of precious stones should be ignored when advancing against jewels. Sufficient margin should therefore be allowed for the approximate weight of such stones, and for the purpose of advance, only net weight so arrived at should be computed. ii) Jewels containing Thread: Similarly, some jewels contain thread, made of cotton silk and of even other base metals like copper or silver. In such cases, too, adequate margin should be allowed so that the approximate weight of such extraneous substance is ignored. Advances against jewels should be discouraged where such extraneous substance is out of proportion to the gold used. (F) Examination of Purity: The Jewel Appraiser and the Branch Manager or the authorised officer shall examine the purity to their satisfaction. Contd.6

6 Circular No BC-CD Date: : 6 : (G) Loans against the pledge of Gold coins sold by Banks Jewel Loan on the security of Gold coins sold by Banks can be arranged by Branches to meet genuine credit requirements, on similar terms & conditions, as in the case of JLs against gold ornaments/ jewelleries. Branches may refer to HO Circular No BC-CD dt OTHER ASPECTS A) Per gram lending rate & Margin: As stipulated from time to time. B) Certification: All the particulars required viz., item wise(not total) details of the ornaments, gross weight, net weight, purity, per gram estimated value are to be entered and filled up by the Jewel Appraiser in the appropriate place in Jewel Appraiser s certificate and the Jewel Appraiser should sign at the place allotted for his signature. C) Scrutiny of Appraiser's Certification: i) When the Jewel Appraiser s certificate is received with the signature of Jewel Appraiser, the Head of the branch should verify his signature and ensure that the Jewel Appraiser has given all the particulars completely, ii) The Head of the branch should verify and satisfy himself that the valuation made is fair and that the gross weight, net weight and purity certified by the Jewel Appraiser are found in order. D) Jewel Appraisers shall not be allowed to fill the Jewel loan application forms except the Jewel Appraiser s certificate and they shall not be allowed to make entries in the Jewel loan ledger also. E) Branch Managers shall receive the gold ornaments from the Jewel Appraiser immediately after appraisal of the Jewels pertaining to a customer is completed and not in a bunch at the end of the day. F) While renewing the Jewel loans, Jewels shall be appraised again invariably though these Jewels were appraised earlier. G) The Regional Offices shall arrange for re-verification of jewels pledged in all the branches in the Region every year by the Jewel Appraiser of other Branches during the months of April and May, obtain a certificate duly signed by the Custodian, Joint Custodian and the Branch Manager with regard to purity, weight etc., from all branches and submit a consolidated certificate of the Regional Office to the Head Office. Contd.7

7 : 7 : Circular No BC-CD Date: SANCTION OF ADVANCE (A) The head of branch will determine the amount to be advanced taking into consideration the purpose of the loan, gross weight and net weight of the gold ornaments, its purity, scale of finance (for crop production), per gram lending rate of the gold, per party sanctioning powers as communicated from time to time etc., and pass sanctioning orders in ADN-9 under his signature and date. (B) Before sanctioning the loan, the head of the branch should satisfy himself / herself that the advance is not for speculative purposes. (C) In all cases margin prescribed by the Head Office / Regional Office should be maintained. (D) Processing of Loan proposal: After the loan amount is decided upon, the necessary documentation should be completed as under. i) Obtention of Loan Papers from the Borrower: (a) After necessary forms and vouchers are prepared, the party's signature shall be obtained at the required places on ADN-9, vouchers and in the Jewel Loan Ledger (AB-4). (b) All signatures in vernacular should be translated in English. (c) Illiterate borrowers should affix their left thumb impression on the papers/ledger. Such impressions should be described by the concerned staff members under initials and the impression should be duly got identified. Two copies of photograph should be obtained from the borrowers and their left thumb impression should be obtained on the reverse of the photograph, if not obtained while opening of the SB account. One copy to be kept with the loan documents and the other is attached to the ledger folio. (E) Safekeeping of Jewels and papers i) The jewels pledged shall be kept in thick transparent polythene bags. These bags can be used for small loans or where the number of items pledged can be conveniently kept in such bags. However, when the jewels cannot be accommodated in this type of polythene bags, cloth bags are to be used. Contd.8

8 Circular No BC-CD Date: : 8 : ii) JL Tag: A tag giving the JL A/c number, the amount of advance and the name of party is to be inserted before closing the polythene bag. If a cloth bag is used, tag giving the said particulars is to be kept inside the bag before closing and one additional tag is to be fastened to the bag. iii) Joint Custody: As and when the Jewel loans are arranged, the jewel covers or bags are to be kept inside the safe by the Manager in the presence of the joint custodians. The smaller bags have to be kept serially in the trays or bigger cloth bags attaching a card board ticket kept in each bag giving the numbers of the loan accounts (F)Safe custody of Loan Papers: i) The Manager and the joint custodians shall check the jewels with the ADN-9, enter the loan a/c numbers in the single lock cash book and then keep them in the safe. Likewise, the loan a/c numbers of jewels delivered also shall be entered in the single lock cash book. At any point of time, the total number of jewel bag noted in the single lock cash book shall tally with the physical number of bags kept under joint custody. ii) The loan papers are to be arranged serially and kept in a file or pusthi separately under each four broad heads viz., JL(Ag.), JL (G) Swarna Credit Card and JL (STF). Every year, new number beginning from 1, followed by the year should be given under each broad four categories referred to above using abbreviation viz., (JL (Ag.) 1/2010, JL (Gen.)1/2010 and so on. G. Processing Charges and JA Fees: On each loan, processing charges as applicable to respective loan schemes and JA Fees as communicated from time to time are to be collected / charged at the time of arranging the loan as per the circulars issued from time to time. The guidelines communicated on collection of Processing charges and JA fees, vide Circular No BC-CD dt are reproduced hereunder. Contd.9

9 : 9 : Circular No BC-CD Date: At present, Branches are collecting processing charges and Jewel Appraiser s fee in cash at the time of arranging the Jewel loans. This tends to deprive the borrower of the psychological satisfaction of receiving full amount of the loan. Keeping the same in view, it is decided to permit the branches to debit the processing charges and Jewel Appraiser s fee to Jewel Loan accounts. However, the borrower s option to pay these charges in cash will be continued. 12. ACTION ON IRREGULAR LOANS The Jewel loans both under JL(Ag.), JL(Gen) including Swarna Credit Card and JL(STF)schemes shall be recovered as per the repayment schedule given. A) If the borrower has not repaid the jewel loan in full on or before the due date or when the amount of the loan is likely to exceed the value of the ornaments, whichever is earlier, ordinary notice should be sent. In any case it should be ensured that sufficient margin is maintained to the outstanding loan amount. B) If there is no response to ordinary notice, registered notice with acknowledgement due should be sent, besides contacting the borrowers personally, wherever possible. C) If the loan is not repaid, the jewels shall be auctioned by following the procedure given under Para No.14. Branches shall not allow Jewel loans to turn to NPA under any circumstances. Recovery steps shall be initiated immediately after the expiry of due date of the Jewel Loan and well before the outstanding balance exceeds the market value of jewels pledged. The accountability in respect of clean jewel loans (amount left over in the account after the auction of jewels and appropriation of the proceeds to the loan account) will be fixed on the Branch Managers during whose tenure the due date of the Jewel Loan has expired but no action for recovery has been initiated and also the Branch Managers who have worked subsequently in the branch and not taken any steps for recovery of the loan and allowed the outstanding balance to exceed the market value of the jewels pledged. However, if jewels could not be auctioned before the said time limit on any justifiable grounds or on account of any reason which is beyond the control of Branch and there is sufficient margin to the value of jewels and the outstanding loan amount, AOD shall be obtained for such Jewel loans before completion of two and half years with the prior permission of the Regional Office. This provision should not be construed in any way as blanket permission for continuing the JLs beyond two and half years. Contd.10

10 Circular No BC-CD Date: : 10 : 13. RELEASE OF JEWELS ON REPAYMENT (A) When the principal and interest are paid in full, the pledger's signature in the ledger under 'Received the jewels pledged' is obtained. This signature is compared with the specimen obtained already in the ledger and the pledge forms to ensure that the signature is genuine. The JL docket issued will also be taken back. When the signature is found to be genuine, the jewels will be delivered to the pledger. (B) When the principal, interest and all bank charges are recovered in full, security/ies to the jewel loan should be retained under general lien of the bank, if borrower owes to the bank any amount directly or indirectly, (i.e., as a borrower or surety or guarantor or co-obligant) which is overdue and security to that loan is insufficient, till all the dues either direct or indirect are paid in full. (C) Precautions: i) When there is any difference in the signature recorded in the JL ledger, attestation from a respectable person known to the bank should be insisted upon. ii) As far as possible, surrendering the docket issued at the time of pledge by borrowers should be insisted upon. In the case of illiterate persons, utmost care is necessary when delivering the jewels. In such cases, surrender of dockets should be invariably insisted upon as this will help to some extent to identify the persons. iii) Another precaution to be observed is to ask the pledger to describe the jewels pledged before they are handed over to him. iv) The bag containing the jewels to be delivered should be taken out of safe by the joint custodians and should be held safely by the Manager or the concerned joint custodian until the jewels are delivered. It is advisable to deliver the jewels immediately after they are brought out of the safe. v) Endorsement in Ledger: After the jewels are delivered, the Manager should endorse in the ledger folio of the respective JL A/c in Jewels Delivery Ledger (AB-4) with date and signature, the delivery of the jewels, thus, Jewels delivered by me (Signature with seal and date) Contd.11

11 Circular No BC-CD Date: : 11 : vi) Return of Jewels to Third Parties: (a) Jewels can be returned to third parties after the loans are closed on receipt of due authorisation letter from the borrower after following the aforesaid procedure. The specimen signature of the person receiving the jewels must be recorded in the letter of authority duly attested by the borrower. (b) The signature of the third party should be obtained on a Stamped Receipt of the prescribed value in the respective folio of the JL ledger at the time of delivery of the jewels. An endorsement must also be made in the ledger by the Manager giving a reference of the authority letter of the borrower. The letters of Authority are to be preserved under Joint Custody. (c) The letter of authority should not be accepted by branches, if the letter is produced after the death of the borrower. (D) i) Part Redemption: Part redemption should be avoided as far as possible. However, when such redemptions are made, an acknowledgement in the jewel loan ledger giving the particulars of jewels delivered, its gross and net weights and assessed value should be got signed by the borrowers. A similar note should also be made in the relative ADN-9 under the heading "Part deliveries of securities pledged". ii) Delivery of Jewels of Deceased Borrower: In case of the deceased borrower, the jewels can be delivered to the legal heirs against the clearance of all the liabilities. Branches may dispose of the claim papers at branch level when the net value of the assets is within the discretionary powers specified and after completion of all formalities. Claims beyond the branch discretionary powers should be disposed of only after getting the permission of RO/HO on settlement of the claim. iii) Sending of Jewels by Insured Post: (a) After the loan is closed and only after receipt of a letter of request from the borrower to send jewels entirely at his risk and responsibility, jewels can be sent by Insured Post. (b) If there is bank's branch, where the borrower resides, the jewels should be preferably sent to our branch for being delivered against a stamped receipt. (c) Besides, out of pocket expenses/service charges for sending the jewels by insured post, should be collected. (d) Cancelled ADN-9 may be sent to delivering branch for the purpose of comparing the signature of the borrower. Contd.12

12 Circular No BC-CD Date: : 12 : [ (E) Where Jewels are not delivered after closure of the Loan: i) Where the party has not called at the branch to receive the jewels remitting the dues in full, an endorsement to that effect should be made in the concerned loan folio of the Jewels Delivery Ledger (AB-4) under the full signature of the Manager/Joint Custodian. ii) The particulars of such jewels should be entered in the securities register under the signature of the custodian and the joint custodian. iii) Notice to the Borrower should be sent for taking delivery of the jewels and constantly followed up. When the borrower approaches for taking delivery of the jewels, the procedure as in the case of delivering the jewels on full payment should be followed. 14. AUCTION OF JEWELS (A) Registered Notice: In case the loan amount is considered not recoverable unless the jewels are auctioned, final registered notice with acknowledgement due is to be sent to the last known address of the borrower informing him of the proposed date and time of auction. Minimum notice of one month shall be given to the borrower for settling the dues before the gold is auctioned. The acknowledgement card or the registered envelope received back undelivered for any reason should be kept along with the loan papers. (B) Newspaper Publication: When there is no response to the Registered Notice or the Registered Notice is returned or refused or where the notice of sale cannot be served on the borrower or on the legal heirs of the borrower (in the case of death), a sale notice is to be published in a local Newspaper having a fair circulation in the area covered by the branch about 10 days in advance of the proposed date of auction. It shall be ensured that the name of the borrower, who has repaid the loan in full just before the publication of the auction notice is deleted from the list given to the press by informing the same to the publisher through a letter or phone or otherwise. However, Newspaper publication may be resorted to only as per the directions of the Regional Office from time to time. The notice of such auction sale should also be displayed on the Bank's notice board and in prominent places. The notice should contain the usual terms of sale and in particular that the bid amount should be paid immediately in cash by the successful bidder. (C) Loans of Rs.500/- and Below: In the case of loans of Rs.500/- and below where auction of jewels become necessary, all such cases may be taken up for auction twice in a year preferably on the 15th of March and 15th of September every year. Contd...13

13 : 13 : (D) Notice to the local gold merchants etc.: Circular No BC-CD Date: i) Prior to the date of auction, the branch must give notice to the local gold merchants, shroffs etc., to be present and bid at the auction. The signatures of the persons to whom the notice has been circulated should be obtained. The time of auction shall be fixed only after business hours. (E) Waiver of Auction: Auctioning of jewels can be waived if the borrower pays the loan amount along with interest and other charges before commencement of the auction. (F) Auction Procedure: i) Collection of Advertisement charges: Before auction of Jewels is commenced, branch shall calculate average advertisement cost that has to be collected before the loans are closed. The average advertisement cost or per account advertisement cost has to be arrived at by dividing total advertisement cost by number of Jewel loan accounts in the case of which advertisement is given and rounded off to the next five rupees. The expenditure incurred for giving advertisement through News paper can be initially met by debiting the General Charges (Contingencies) A/c. However this amount should be re-credited to the same account by debiting to respective jewel loan accounts immediately. ii) Auction Yadast: (a) The Auction shall start at the advertised time. (b) The bidder's name and bids have to be noted in the Auction Yadast (Annexure III) and signatures have to be taken for the bids made. (c) The Auction Yadast must be kept properly filed after the auction. iii) Bidding: (a) Each loan will have to be taken up separately and respective jewels are auctioned item wise separately keeping the initial bid at a figure arrived at after taking into account the prevailing price of gold. If auction proceeds of few items / ornaments pledged by a borrower are sufficient to cover the loan amount outstanding and other costs, the other ornaments should not be put to auction. {b) In case of auction of jewels for recovery of Jewel loans, branches may auction the jewels for the highest bid in the first auction itself. (c) Staff members or their relatives, Jewel Appraiser or his relatives are not permitted to participate in the auction. Contd.14

14 Circular No BC-CD Date: (G) Disposal of Auction Proceeds: : 14 : i) After the final bid is made and accepted, the amount should be collected from the successful bidder and the loan is closed. ii) Proportionate cost of publishing the auction notice and other incidental expenses must also be recovered from the proceeds. iii) The balance, if any remaining after the adjustment of the loan amount should be credited to SB or Current Account of the borrower under information to him. iv) When the borrower is not having his account or his account is closed before the auction, the balance amount may be kept in suspense account of the borrower and settled within one month under any circumstances. (H) Delivery of Jewels to the Successful Bidder: i) The signature of the successful bidder must be obtained in the respective folio of Jewels Delivery Ledger at the time of delivery of jewels and the Manager should endorse in the Jewels Delivery Ledger with date and signature for having delivered the jewels to the successful bidder. ii) The Manager must make an endorsement in the Jewels Delivery Ledger (AB-4) indicating that an auction has been held after due notice to the borrower, the sum of Rs. has been realized by accepting the highest bid and the proceeds have been appropriated to the loan account and the balance of Rs. is credited to SB / Current A/c of the party or kept in suspense account of the party, if the SB / current a/c is closed. (I) Intimation to the Borrower: i} After the auction process is completed, the borrower is to be informed of the amount realised at the auction and balance, if any, payable to him after appropriating the necessary amount to the loan account, ii) In case of shortage, the party should be called upon to pay the balance immediately and proper recovery steps shall be initiated immediately for the recovery of shortfall in consultation with R O. iii) A report of the auction held should also be sent to Regional Office with full particulars and approval /confirmation from the Regional Office shall be obtained. Contd.15

15 : 15 : Circular No BC-CD Date: JEWEL APPRAISERS (A) Appointment of Jewel Appraisers: The branches which are sanctioning/arranging the Jewel loans to their customers require the services of the Jewel Appraisers for appraising of the jewels. The Jewel Appraisers are to be appointed for this purpose on agency basis and the powers to appoint the Jewel Appraisers are vested with the Head Office. The following procedure should be adopted while making appointment of the Jewel Appraisers. i) The branches should select respectable and suitable candidates who are having good experience in the appraisal of jewels and send their applications in the enclosed proforma (Annexure-I) together with their latest passport size photographs and two testimonials from respectable persons in the area certifying the character and integrity of the candidates, recommending their appointment, to the Regional Office concerned. ii) On receipt of the applications duly recommended by the branch, the Regional Office shall forward the same to the Head Office with their recommendations. iii) The Head Office, after scrutiny would appoint the Jewel Appraiser and send appointment letter to the branches. iv) Letter of appointment is to be delivered to the selected candidate by the branch against his acknowledgement. v) An indemnity bond from the Jewel Appraiser and Two creditworthy persons, having good reputation and satisfactory dealings with the branch in the enclosed proforma (Annexure-II) on a stamp paper of requisite value shall be obtained and kept as security at the branch. The format of Indemnity bond should not be changed without the approval of the Head Office / Regional Office. Security Deposit required as per Circular No BC-CD dt is as under. a) All newly appointed Jewel Appraisers Rs.50000/- b) Existing Jewel Appraisers of Urban branches Rs.50000/- c) Existing Jewel Appraisers of Semi-Urban branches Rs.35000/- d) Existing Jewel Appraisers of Rural branches Rs.25000/- Contd.16

16 Circular No BC-CD Date: : 16 : vi) He should also give an authorisation letter to the branch to deduct 10% of the Jewel Appraiser's fee payable to him and to credit the same to his security deposit account on monthly basis. The interest applicable to the security deposit of the Jewel Appraiser will be stipulated by the Head Office from time to time. vii) The Jewel Appraiser's fee payable to the Jewel Appraiser is fixed by the Head Office from time to time. (B) Termination / Resignation or death of the Jewel Appraiser: i) The powers relating to termination or acceptance of resignation are vested in the Head Office ii) Termination: If for any reasons, the termination of the Jewel Appraiser is warranted, the Head Office, after getting the report from the Branch / Regional Office and deciding about it, should order for the termination of the Jewel Appraiser and issue the termination order. The security deposit of the Jewel Appraiser should be repaid only when all the dues that may arise on account of the defective appraisal of the jewels, are cleared and the jewels in respect of all the outstanding loans have been got reappraised by the new Jewel Appraiser or the Jewel Appraiser of the nearby branch. iii) Resignation: (a) If the Jewel Appraiser submits the resignation for acceptance, it should not be accepted immediately unless all the jewel loan accounts in which the jewels were appraised by him are closed in full settlement. (b) If he wants the resignation to be accepted immediately, all the Jewels Appraised by him in the jewel loan accounts outstanding on the date of his resignation should be got reappraised by a Jewel Appraiser of nearby branch or well-known goldsmith of integrity known to the branch and the resignation of the Jewel Appraiser may be accepted after obtaining the appraisal certificate from the goldsmith and collecting the reappraisal and out of pocket expenses and the loss caused to the bank on account of the defective appraisal of the jewels, from the Jewel Appraiser concerned. (c) The security deposit of the Jewel Appraiser may be refunded afterwards, if there are no other claims by the bank. Contd.17

17 : 17 : Circular No BC-CD Date: iv) Procedure to be followed in the case of death of the Jewel Appraiser: (a) In the case of death of the Jewel Appraiser, the Jewels Appraised by him should be got reappraised either by the Jewel Appraiser newly appointed or by a Jewel Appraiser of near-by branch or a well-known goldsmith of integrity, known to the branch, if there is delay in making fresh appointment at the branch. Refund of the security deposit to the legal heirs of the deceased Jewel Appraiser should be made after collecting the reappraisal fee and out-of-pocket expenses, if any, and the loss caused to the bank on account of the defective appraisal of the jewels. The branch should also ensure that there are no dues to the bank from the said Jewel Appraiser. (b) The orders for refund should be issued by the Head Office. 16. JEWEL APPRAISER'S FEES ACCOUNT (A) The fees at the prescribed rate (presently 30 paise per Rs.100/-) collected while arranging each loan should be credited to this account. (B) Once in a month, as at the end of the month, 10% of the total fees credited to this account, should be transferred to Appraiser's Security Deposit Account as per the letter of authority given by him at the time of his appointment. The balance amount of fees may be credited to his SB account at the branch. 17. JEWEL APPRAISER'S SECURITY DEPOSIT ACCOUNT (A) The initial security deposit paid by the Appraiser should be credited to this account. (B) 10% of the total Jewel Appraiser's fees payable to the appraiser every month should be credited to this account. (C) Interest at the rate prescribed by Head Office from time to time will be credited to this account in June and December, calculat -ing interest on the basis of monthly minimum balance in the account. (D) Interest on this account should not be credited to his regular banking account. (E) The security deposit along with the interest accrued thereon is refundable only on resignation /termination or death of the Appraiser as stated under paragraph No.15. Contd.18

18 Circular No BC-CD Date: : 18 : (F) The rate of interest payable from the date of termination / resignation or death of the Appraiser until repayment, is as applicable for term deposits for the period for which the deposit is held with the bank. G) Refund should be made only after obtaining permission from the Head Office. 18. OTHER GUIDELINES: The other guidelines applicable to respective loan schemes as communicated through the Desk Guide on Advances and Circulars, which are furnished hereunder shall be followed. S. Circular No. & Date Subject No. 1 Desk Guide on Advances Pragathi General Gold Loan scheme BC-CD dt Revision of due date for recovery of interest on Pragathi General Gold loan scheme 3 Desk Guide on Advances Pragathi Swarna Credit Card scheme BC-CD dt Jewel loan under Agriculture Sector BC-CD dt Jewel loans against Pledge or Gold coins BC-CD dt Debiting of processing charges & JA fees. 7 Desk Guide on Advances Staff Jewel loan scheme 19. REPORTING OF JEWEL LOANS SANCTIONED BY BRANCHES: Branches shall report the Jewel loans of Rs.25000/- and above sanctioned by them every month to the Regional Office in ARM-9 statement separately for Jewel loans (Ag.) and Jewel loans (Gen.) / Swarna Credit Card on or before scheduled date. Regional Offices, after reviewing the ARM-9 statement received from Branches shall submit a review report in ARM-105 to the Head Office with their observations on or before scheduled date. All Branches and Regional Offices are advised to follow the above guidelines scrupulously without giving any scope for frauds. Clarifications required, if any, on this circular may be sought from Credit Department, Head Office, Kadapa, through respective Regional Office, as per extant guidelines. (K.PREETAM LAL) CHAIRMAN

19 Enclosure to Circular No BC-CD Date: ANNEXURE - I ANDHRA PRAGATHI GRAMEENA BANK HEAD OFFICE :: KADAPA CREDIT DEPARTMENT The Chairman, Andhra Pragathi Grameena Bank, Credit Department, HO : KADAPA Photo Application for appointment of Jewel Appraiser I, hereby submit my bio-data for your kind verification and consideration of my candidature for appointment as Jewel Appraiser to your Branch. 1. Name of the applicant : 2. Name of the father : 3. Present residential address & Phone No.: 4. Permanent Address : 5. Educational qualifications : 6. Date of Birth and Age (Enclose Proof) : 7. Experience in the field (Enclose relevant proofs) : 8. Present Occupation (other than gold work): 9. Details of assets of the applicant : a) Movable : b) Immovable (Enclose proof) : c) Annual Income with sources : 10. Details of direct and indirect liabilities of the applicant a) Direct liabilities : b) Indirect liabilities :

20 Enclosure to Circular No BC-CD Date: Whether the conduct certificates from two of the reputed persons of the village are enclosed? 12. Whether applicant is acting as Jewel Appraiser to any of the branches of our Bank / other Banks? 13. Whether the applicant s relative/s is/are acting as Jewel Appraiser in any of our branches? If so, furnish the details. 14. Any other information: I shall abide by the terms and conditions of the Bank and work sincerely and honestly in appraisal of gold ornaments / jewels. I am willing to provide a security deposit of Rs. /- and furnish Indemnity Bond-cum-Guarantee Bond as required. I submit that I am fully aware that my services will be engaged for appraising jewels only and I will not be claiming anything as an employee of the Bank at any future date. I enclose conduct certificates issued by two of the reputed persons of the village. Place: Date: Signature of the applicant Encl: Recommendations of the Branch Manager: (Social status / reputation in the village etc. shall be covered. If necessary use separate sheets) Place: Date: Signature of the Branch Manager Recommendations of the Regional Manager Place: Date: Signature of the Regional Manager

21 Enclosure to Circular No BC-CD Date: ANNEXURE - II INDEMNITY BOND-CUM-GUARANTEE BOND THIS DEED OF INDEMNITY is executed on this..day of 200. by and between Sri., s/o.... aged about.... years, R/o. (hereinafter called the first part) AND 1) Sri, s/o. aged about.. years, R/o.. 2) Sri, s/o. aged about.. years, R/o (hereinafter called the second part) in favour of Andhra Pragathi Grameena Bank, a scheduled bank sponsored by Syndicate Bank licensed by Reserve Bank of India (RBI) under the Regional Rural Banks Act 1976 and having its Head Office at Kadapa and having one of its branches at.. (hereinafter called Bank). The expression first part, second part and bank shall mean and include its successors assigns legal heirs, legal representatives, etc. Whereas the bank has appointed the first part as a jewel appraiser. Whereas it was a condition the first part should give indemnity and also a third party guarantee. Whereas in consideration of appointing the first part as a jewel appraiser the second part hereby agreed to stand as a guarantor for indemnifying the bank against any losses, damages, caused by the first part during the course of appraisal of jewels. NOW, THESE PRESENTS WITNESS AS FOLLOWS: I. In consideration of the said appointment first part hereby undertake at all times to indemnify and keep harmless the Bank from all claims and demands made and all actions and proceedings taken against and all losses suffered and all expenses incurred by the Bank by reason of any act, omission, neglect or default of the first part in the course of discharge of duties while acting as jewel appraiser of the Bank or thereafter.

22 Enclosure to Circular No BC-CD Date: II. The first part hereby agrees with the Bank as follows: i) The first part hereby admits he is not an employee of the Bank but whenever called upon by the Bank or their attorney, first part shall faithfully discharge the duties of appraising and valuing gold or jewels entrusted to and after appraising and valuing, immediately hand over the same to the Bank. ii) iii) iv) That first part hereby agrees he shall prepare and sign all the requisite papers relating to the appraisal and valuation. That first part hereby agrees he will not lose, misappropriate or damage any gold or jewel while in his custody or under his supervision. That first part hereby agrees he will observe complete and very strict secrecy in the matter of the Bank s transactions or any other information relating to the Bank or their customers or any trade secrets which first part may become possessed of while in the service of the Bank and will not reveal the same except when compelled to do so by a Court of Law. v) That in the event of any loss arising or accruing or likely to accrue to the Bank either in cash or in reputation from any of the causes herein mentioned it shall be competent for the Bank to determine and fix the amount of the said loss and the amount so fixed shall be binding and be conclusive evidence against the first part and shall not be questioned or challenged in a Court of Law. vi) vii) viii) That first part shall have no right to claim the return of any security that first part has made for or on any other account or that first part may hereafter make or any assets or funds belonging to first part or any money lying to his credit under any kind of account with the Bank except upon full payment and satisfaction of all and every kind of claim, loss or liability, be the nature of the same secured or otherwise, present or remote, future or contingent or circumscribed by any limitation whatsoever. That for the purpose of this deed all act, omission, neglect or defaults of any of deputies or persons authorised by first part shall be deemed as acts, omissions, neglects and defaults of the first part. That on breach of any of the covenants herein contained or for any other reason which the Bank consider as sufficient, it shall be open to the Bank to cease requisition of services of the first part as jewel appraiser without prejudice to the rights and remedies which they possess under this deed.

23 Enclosure to Circular No BC-CD Date: III. The second part hereby agrees with the bank as follows: i) In consideration of appointing the first part as a jewel appraiser the second part hereby undertakes at all times to indemnify and keep harmless the Bank from all claims and demands made and all actions and proceedings taken against and all losses suffered and all expenses incurred by the bank by reason of any action, omission, neglect or default of the first part in the course of discharge of his duties while acting as jewel appraiser of the Bank or thereafter. ii) iii) iv) The second part hereby stood as a guarantor/surety agreeing to reimburse for any losses caused by the first part to the Bank. The second part hereby waive all his rights which are available under Indian Contract Act. This indemnity cum guarantee shall continue till all the claims if any are fully satisfied or settled. v) The bank is entitle to proceed against the first part or second part or jointly to recover its losses or damages etc. caused by the first part during his services as a jewel appraiser. IN WITNESS WHEREOF the first part and the second part signed this deed on the day, month and the year mentioned above. (Signature of the first part) i) ii) (Signatures of the second part) In the presence of : 1. 2.

24 Enclosure to Circular No BC-CD Date: ANNEXURE III ANDHRA PRAGATHI GRAMEENA BANK BRANCH Loan A/c No. Date: AUCTION SALE SCHEDULE Particulars of articles sold by Public Auction at the Office of the Andhra Pragathi Grameena Bank Branch on at (time) and the bids made at the auction and disposal of the articles and the final price. S. No. Particulars of articles Estimated weight Estimated price Bidder s Name Each Bid Price Bidders Signature Received the above articles Sale Proceeds Rs. Adjusted as under: Principal Rs. Final Bidder s Signature Interest Rs. Place: Date: Costs SB / C a/c Rs. of the borrower Rs. Total Rs. JOINT CUSTODIAN CUSTODIAN MANAGER