The Legislative Council on Friday allowed a private member Bill to curb harassment of those who pledge gold by non-banking financial companies and private finance institutions in the State. Congress member Ramesh Babu moved The Karnataka Protection of Borrowers Who Have Pledged Gold Bill that the House agreed to discuss next week.

Moving the Bill, Mr. Babu said the borrowers who pledge gold in case of emergency need to be protected since the companies were auctioning gold after default and making huge profits. “The borrowers get about 50% of the value of gold on the day it is pledged. Later, gold value increases and during auctioning the companies realise a higher amount which is not shared with borrowers. There is a need to regulate gold loan companies to protect borrowers.”

Currently, he pointed out that the borrower is not given any notice for auction, and that Bill seeks to introduce a minimum notice period of 180 days, and auctioning to be conducted through a licensed auctioneer approved by the State government in the presence of a government official. “Surplus amount remaining after deducting the due should be refunded to borrowers without 15 days.”