The High Court of Karnataka has prima facie said that activities that are not included in the exceptions provided by the State Government in the order for lockdown including holding of auctions of attached properties by banks, will constitute a violation, attracting prosecution.
However, amid the lockdown few private banks and financial institutions offering gold loans have auctioned the gold without informing the borrower. Speaking on this Advocate Haradooru Javaregowda shared an incident with News Karnataka that Sharan*, resident of Mysuru had borrowed Rs. 2,90,544 gold loan from Catholic Syrian Bank on 28 December 2020. The bank sent him the notice to repay the amount, due to the Covid induced financial crisis it was not possible for him to repay. However, he paid Rs 20000, an interest for 4 months on May 18, and the bank without sending him any notice has auctioned his 87.1 gm gold on May 28.
Javaregowda informed that amid the Covid pandemic people are in financial distress. Due to the Covid induced lockdown, the businesses are at loss and people are finding it difficult to repay the loan. Few private banks and financial institutions are utilising this situation as an opportunity and the staff have auctioned the gold without informing the borrower.
“Banks will send notice to repay the loan within 3 months. Usually, it is not possible for many of the borrowers to respond immediately. After that, without sending any further notice they have auctioned the gold. The bank employees have made secret deals with the gold sellers, and they are making money through this business. They even don’t credit the remaining amount over the amount of loan to the account of the borrower. Only a few people have registered FIR against this, and many have ignored this as they anyhow did not have another source of income to repay the loan,” he said.
“The government and the police have to take serious actions against such banks and extend the limit of the repayment of loans for at least 6 months,” he added.
*Name changed to protect privacy
