Maharashtra Government to Establish SOP for Gold Valuers' Honorarium
The Maharashtra government announced on Monday its intention to formulate a standard operating procedure (SOP) concerning the honorarium paid to gold valuers by banks. This decision comes in response to significant concerns raised in the Legislative Council regarding the low fees and escalating risks faced by jewellers involved in gold loan assessments.
Calling Attention Motion Highlights Underpayment
Cooperation Minister Pankaj Bhoyar addressed a calling attention motion moved by MLC Chitra Wagh. Wagh emphasized that valuers, who are predominantly jewellers, are severely underpaid despite carrying substantial financial and legal responsibilities in gold loan transactions. She detailed that valuers earn approximately ₹350 for assessing gold worth ₹10 lakh, a fee that private banks have reduced by nearly 60% in recent years without consultation.
Wagh argued that with gold prices rising and compliance requirements becoming stricter—including fraud prevention, ownership verification, and KYC norms—the burden on valuers has increased dramatically. She called for a fee increase of at least 30% to reflect these heightened risks, which include liability and insurance in cases of incorrect valuation. Additionally, she demanded the removal of "unlimited indemnity" clauses and the establishment of clearly defined, reasonable liability limits in agreements.
Government Response and Limitations
In his reply, Minister Bhoyar stated that the government would consult legislators before finalizing the SOP on honorarium. However, he indicated that direct intervention in fee structures might be limited, as such charges are typically determined through contractual agreements between banks and valuers. He noted that the state government has not issued specific guidelines on gold loan transactions, which are primarily governed by norms set by the Reserve Bank of India (RBI).
Bhoyar explained that gold loans are extended by various institutions, including nationalised and private banks, cooperative banks, rural banks, cooperative credit societies, and non-banking finance companies (NBFCs). According to RBI guidelines, banks can lend up to 65% of the gold value for loans up to ₹2.5 lakh and up to 75% for loans up to ₹5 lakh, with a typical repayment period of one year.
Potential Impact on Borrowers and Current Practices
The minister cautioned that any increase in valuation fees could ultimately be passed on to borrowers, potentially making gold loans more expensive for customers. "Since the fee charged by valuers is often recovered from borrowers, recommending an increase may not be appropriate," he said. Bhoyar reiterated that matters such as valuation fees are considered contractual between banks and valuers, placing them largely outside the scope of direct government regulation.
He added that while some large banks utilize machines to test gold purity, many institutions continue to depend on human valuers. Despite this reliance, there are no prescribed norms by either the RBI or the state government regarding the fees payable for such services.
Demands for Broader Reforms
Wagh also pressed for broader reforms, including standardized loan agreements in Marathi, balanced contractual terms between banks and valuers, and stricter implementation of documentation and KYC norms to curb fraud. She claimed that proper verification and documentation could reduce instances of fake jewellery being pledged by up to 10%.
While the government stopped short of announcing immediate regulatory changes, the proposed SOP—to be drafted after consultations—signals a potential framework to address concerns over compensation, accountability, and risk-sharing in the gold loan ecosystem. For thousands of jewellers working as valuers across Maharashtra, this move is likely to be closely monitored as they advocate for fair pay in a sector that underpins a key segment of retail lending.
