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Goodwin Jewellers fraud: No recourse for depositors as jewellery schemes are unregulated

Suresh P Iyengar Mumbai | Updated on October 29, 2019 Published on October 29, 2019

Rajendra Kumar, an engineer employed in a private sector company, is shattered ever since Goodwin Jewellers at Dombivli in the outskirts of Mumbai shutdown.

He had been depositing ₹5,000 a month for the last nine months with the jeweller. It was to mature in two months. But now his plans to buy bangles for his daughter on her birthday has gone for a toss.

Kumar is among over 60 others who had gathered outside the shop after it remained shut for two consecutive days before Dhanteras, an auspicious occasion to buy gold.

Some among the distressed crowd had received messages from the promoters of Goodwin Jewellers saying that their money is safe without explaining when they will get it back. Over 300 complaints have been filed with the police across Maharashtra. The promoters are yet to be traced.

The saddest part of the entire event is there is no immediate recourse for consumers, mostly women, who had lost their hard earned money in the monthly schemes promoted by the fly-by-night jewellers as these schemes are unregulated.

In fact, the Banning Unregulated Deposit Schemes Bill, 2018, passed by Parliament early last year banned all unregulated deposits, replacing the earlier legislative-cum-regulatory framework that has considerable time lags.

This has hit several jewellers incorporated under the Companies Act 2013 from taking monthly deposits. The jewellery schemes usually have a tenure of 11 months, with the jeweller waiving the instalment for the 12th month or not charging making expenses.

Jewellers show these deposits, unregulated by any agency, as advance against sales. According to industry estimate about 25 per cent of the entire jewellery sales are through the monthly gold accumulation scheme.

The jewellers when they take money from customers do not allocate any gold against the money received and it becomes a mere working capital loan, said a banker.

With the fund to jewellers being tightened through proper channels they resort to promising more returns, he said.

Somasundaram PR, Managing Director, World Gold Council said with this product getting popular among general public the government should offer it through financial institutions such as banks and insurance companies.

These institutions can allocate gold worth the money deposited by customers and at end of the tenure the entire gold accumulated can be transferred to jewellers. In the entire process consumers will also benefit as they will lock in the gold price monthly, he added.

As a word of caution, Abhay Mehta, a Mumbai-based jeweller, said consumers should be very careful while buying e-gold and ensure that the online platform that sells the gold has a trustee and a custodian to safe-keep the gold against the money invested.

With the gold prices going up, a lot of online platforms have sprung up to sell e-gold at discount but again they are not regulated and consumers should be very careful, he added.

Published on October 29, 2019
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