Missed a gold loan EMI? Know when your pledged jewellery is at risk — Experts explain recovery process and auction rules

If you have taken a gold loan and missed EMI payments, you may be worried about losing your pledged jewellery. However, missing an EMI does not automatically mean your gold will be auctioned.

The risk depends on the loan agreement, the extent of default, and the lender’s recovery policy. Here is what borrowers need to know.

Is there an RBI rule on how many missed EMIs lead to losing jewellery?

No.

Niyati Merchant, Associate Partner at MDP Legal, Advocates & Solicitors, said RBI does not prescribe a universal threshold such as two, three or six missed EMIs before pledged gold can be auctioned.

She added that “The principal regulatory framework is the Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025, issued on 6 June 2025 and amended on 29 September 2025, now seems to be withdrawn. The implementation deadline was 1 April 2026.”

Kapil Makhija, Founder and COO at MInEMI.ai said once any amount stays overdue beyond 90 days, the account becomes a non-performing asset (NPA), and recovery action, including auction, becomes a real possibility.

“The overdue period is calculated from the oldest unpaid instalment. If you missed June’s EMI and paid July and August on time, your account is still ageing on the June default and will cross 90 days in early September,” Makhija said. Borrowers should prioritise clearing the oldest outstanding instalment.

Mukesh Pandey, Founder and MD of Rupyaapaisa.com, said the risk depends on the loan terms, repayment timeline and lender’s recovery policy. Missing an EMI may trigger overdue charges and recovery action but does not mean an auction is imminent. Borrowers should check their loan agreements and contact their lenders promptly.

What is the gold loan recovery process?

Merchant said, “There is no uniform RBI-mandated, day-by-day schedule specifying the number of calls or SMS reminders a lender must send after a missed EMI.” The following is a broad outline of the process; actual timelines depend on applicable rules and the lender’s policy:

• Days 1–30: Reminders and charges. The lender may send calls, SMS or app alerts. Overdue or penalty charges may apply as per the agreement.
• Roughly 30–90 days: Demand for repayment. The lender may send written reminders, a demand notice, or a recall notice seeking payment. Around 90 days overdue, the account typically becomes an NPA, and recovery action intensifies.
• Final notice and auction warning: The borrower is informed that the jewellery may be auctioned if the dues remain unpaid. One bank’s policy provides for an auction date no earlier than 30 days after the public notice, while some lender guides cite a written notice of at least 14 days.
• Public notice and auction: The auction is advertised with details such as the date, venue, reserve price, and bidding terms. The lender can initiate it only after the notice period it has promised in its agreement and policy has run out, and after the public notice has been issued.
• Settlement: The proceeds are adjusted against the outstanding loan and applicable charges. Any surplus is returned to the borrower as required by the applicable rules.

“Borrowers may get roughly four months and several written warnings before gold is at risk,” Mukhija added. Pandey advised borrowers to contact the lender promptly and obtain any agreed repayment dates in writing.

How is the pledged jewellery sold and what can borrowers do?

Pandey said items that have been pawned, usually jewelry, can be sold through a transparent auction process by the lender or an auctioneer. Lenders cannot skip the auction process as it is supposed to be.

Makhija said pledged gold is sold through a public auction under the lender’s board-approved policy, not melted down and sold privately.

“Your right to repay and take the jewellery back survives right up to the auction: clear the dues any time before the sale concludes and the gold is yours. Once sold, the right to reclaim ends,” he added.

For example, if your pledged gold is worth ₹3 lakh and your outstanding dues, including charges, are ₹2.2 lakh, a reserve price floor of 90% would put the auction starting price at around ₹2.7 lakh. The resulting surplus of ₹50,000 must be refunded to you within 7 working days, Makhija mentioned.

Disclaimer: This story is for informational purposes only. Check your loan agreement and the lender’s official website for the latest applicable rules.