Jewellery pledged 15 years ago recalled:Price surge in gold-silver triggers claims; jewellers say records damaged, items melted

I had bought silver 12 years ago at Rs 60,000 per kg. I needed money, so I had pawned it at the jeweler’s. Now when silver prices are over 3 lakhs per kg, I came to redeem it, but I neither paid interest nor did the jeweler find any record. This is what Sanjay Jatav, a resident of Narsinghgarh, says. Many people like Sanjay are currently turning up at the bullion markets of Indore and Bhopal. These are customers who pledged valuable jewellery 10–15 years ago and never returned. They neither paid interest nor followed up on the principal amount. With gold and silver prices touching all-time highs, these old pledges have suddenly come back to mind. Jewellers who accepted these ornaments as security are now in a dilemma, as records dating back more than a decade are difficult to trace. Under moneylending rules, if a borrower fails to pay interest for seven years, the moneylender is permitted to dismantle or dispose of the pledged item. As a result, many jewellers have already melted such jewellery. This situation has begun to strain trust between customers and jewellers, with disputes surfacing in several places. To understand how moneylenders are dealing with this challenge, Bhaskar spoke to bullion traders in Indore and Bhopal. Crowds in market, but no buying At first glance, the bullion markets of Bhopal and Indore appear as busy as ever. Shops are crowded, customers are inspecting jewellery at counters, and old account books are being checked. However, a closer look reveals an atmosphere marked more by tension and uncertainty than enthusiasm. In most shops, neither new jewellery is being sold nor purchased. The crowd mainly consists of three types of people: First: Those who have come to sell household gold and silver to take advantage of higher prices.
Second: Those who are pledging jewellery to meet current financial needs.
Third: The largest group—people who have come to reclaim jewellery pledged years ago. During a visit to one shop, a middle-aged woman entered carrying an old cloth bag. At the trader’s request, she emptied it onto the counter. Inside were blackened silver anklets, waist chains and a few utensils. She said the silver weighed 1.8 kg and that she had come to pledge it to meet household needs. Customers returning to settle accounts Navneet Agrawal, an office-bearer of the Bhopal Bullion Association, says there are over 700 licensed moneylenders in Bhopal alone. “This business has run on trust for generations. But for the past few months, we’ve been facing a strange crisis. “Customers who pledged jewellery 10–15 years ago and never returned are now coming back and demanding their ornaments,” Agrawal said. According to him, these customers are not concerned about the accumulated debt. They believe that even after paying years of principal and interest, the current market value of the jewellery will still leave them with a profit. Customers returning without paying interest Abhishek Agrawal, a jewellery shop owner, said his family’s three-generation-old business is under pressure. “We have never faced a situation like this before. Over the past two to three months, customers from five to ten years ago have started returning,” he said. “We repeatedly sent reminders for interest payments, but they never responded. Now, when we explain the legal provisions, they are unwilling to accept them,” he added. For traders, the biggest challenge is locating entries in ledgers that are 10–15 years old. While some records can be found, many registers have deteriorated due to age or termite damage, making verification nearly impossible. Another trader shared an instance where a customer visited three times within a year, each time asking for a comparison between the current value of his pledged jewellery and the interest due. “He was waiting for the jewellery value to exceed his loan. Once that happened, he cleared the dues and took back the jewellery,” the trader said.
When law and relationships clash A trader cited a case involving a customer from the Banjara community in Sehore. About nine years ago, the customer pledged 400 grams of silver and then stopped all contact. Three months ago, he returned and demanded an account. The total of principal and interest was lower than the current market value of silver, and the customer demanded the difference created by the price rise. However, the trader had already melted the jewellery a year earlier. Under the Madhya Pradesh Moneylenders Act, after a defined period—generally seven years—and after issuing notice, a trader is legally permitted to dispose of pledged items. “Legally, I was not required to pay him anything,” the trader said. “But this business depends on long-term trust. To avoid conflict and preserve the relationship, I returned his money.” Had come to redeem jewelry for daughter’s wedding The situation also highlights the financial distress of borrowers. Sanjay Jatav, who travelled from Narsinghgarh to Bhopal, said he had pledged half a kilo of silver with his family jeweller about 12 years ago. “With my daughter’s wedding coming up and prices so high, I thought redeeming the pledge would offer some financial relief,” he said. However, the accumulated principal and interest now exceed the current value of the silver. “I never paid interest because I never imagined silver prices would rise this sharply,” he said. Due to the long gap, the jeweller had neither the silver nor a clear record of the transaction. What the Moneylending Act says In Madhya Pradesh, lending against pledged gold and silver is governed by the Madhya Pradesh Moneylenders Act and the Madhya Pradesh Debtors Relief Act. Moneylender vs NBFC: How different are the rules?
Unlike traditional moneylenders, Non-Banking Financial Companies (NBFCs) operate under strict regulations of the Reserve Bank of India (RBI). Recently, a company that provides loans against gold collateral has decided to stop auctions in old cases, which shows the changing market dynamics.