Bank says pledged gold is ‘fake’ after unnotified audit, man wins Rs 14.5 lakh

The commission highlighted that the opposite party has also failed to prove that the periodic surprise verification was conducted with the consent or prior notice to the complainant.

‘Possible tampering, replacement’

The case concerned a borrower who had pledged gold jewellery with the bank to obtain three loans for Rs 3.98 lakh in 2022, another Rs 3.98 lakh in March 2023, and Rs 6.42 lakh in April 2023. The borrower said the jewellery was weighed and its purity checked by the bank’s expert each time before the loans were sanctioned.

In July 2023, the bank informed the complainant that a subsequent verification had found the pledged jewellery to be 100 per cent spurious and asked him to repay the entire outstanding loan of Rs 10.95 lakh, along with applicable charges, interest and taxes.

The complainant disputed the bank’s findings, saying any subsequent verification had been conducted behind his back and without notice. He apprehended that the jewellery could have been tampered with or replaced and said he was willing to repay the loan if the bank returned the jewellery in its original condition after independent verification.

Bank blames original jewellery valuer

The bank argued that its periodic internal verification through an empanelled assayer found the jewellery to be 100 per cent spurious. It attributed the problem to the original valuer, against whom it said it had lodged a police complaint, and denied any deficiency in service.

The bank submitted that the matter involved allegations of fraud and complicated questions of fact requiring a detailed investigation. It, therefore, contended that the dispute should be decided by a civil or criminal court, rather than by the consumer commission in summary proceedings.

The bank denied the complainant’s allegation that he had signed blank papers without being informed of the loan terms. It maintained that the terms and conditions were properly explained to him before he signed the loan documents.

Bank fails to prove borrower’s consent: Order

The commission noted that the Reserve Bank of India’s (RBI) September 29, 2025 directions require lenders dealing with gold and silver collateral to conduct periodic surprise verification as part of internal audit, but the loan agreement must contain the borrower’s consent for such verification, including in their absence, and this must be communicated at the time of sanction.

It observed that the bank failed to prove that the loan agreement contained such a clause or that the complainant had given consent for surprise verification of the pledged jewellery in his absence.

The commission pointed out that the same jewellery had been accepted as security on multiple occasions, in 2022 and March 2023, and additional jewellery was accepted in April 2023. Therefore, it could not be said that the bank had sanctioned the loans without checking the purity of the gold.

It held that the alleged impurity was detected behind the complainant’s back, and he could not be held responsible for the subsequent finding of impurity. The bank was legally required to follow the RBI guidelines governing such verification.

Takeaway

The ruling highlighted that banks must follow RBI safeguards when verifying pledged gold, including obtaining and communicating borrowers’ consent for surprise checks. It also highlights that borrowers cannot automatically be held responsible for discrepancies detected during unilateral verification conducted without their knowledge.

Consumers facing similar grievances may contact the consumer helpline in their respective states (Himachal Pradesh: 1800-180-8087) or dial the National Consumer Helpline at 1915 for assistance.

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