Gold mortgage business thrives under cover of trade in jewellery

Jewellery shop owners in the city's Tanti Bazar and Shankari Bazar areas are engaged in 'unlawful' business of gold mortgage because of what they called the dearth of work.
Shop owners said more than one hundred shops in the areas that used to buy gold and silver ornaments until 1995 now were dependent much on the business of gold mortgage.
According to them, the demand for gold ornaments was going down fast mainly due to the deteriorating law and order situation and the higher prices.
A shopkeeper preferring anonymity said they were transacting billions of taka against the mortgage of the precious metal.
The laws of the land do not provide for jewellers extending any credit facility to those mortgaging their gold and other ornaments. But the jewellers have long been doing the business in total disregard for the laws.
"Demand for gold ornaments is falling rapidly. So the jewellers are gradually changing their way of earnings. The gold mortgage business is also part of the diversification," Nemai Chakroborti, who is also in the business, told the FE Sunday.
He said hundreds of goldsmiths were migrating to India for the want of work. "In such a situation if the shop-owners do the mortgage business for their survival, will you say it is illegal?"
Another shop-owner of the area preferring anonymity said there was no allegation against the jewellers that they had cheated any of their clients.
"So what's wrong if we do the business?" he questioned.  
But there were allegations that in many cases goldsmiths were tampering with the quality and weights of the mortgaged ornaments before returning them.
Sajjidur Rahman, an aggrieved client of Mamata Jewellers said he received Tk 120,000 by mortgaging his wife's ornaments. He repaid the money within the stipulated time and received the gold from the shop.
But after six months, he again needed money and went to the same shop. But the shop owner refused to pay the same amount of money claiming that the weight of the ornaments was lower.
"I wanted to tell them the whole story, but they did not listen to me," he said.
Mr Rahman also said the jewellers were charging unusually high interest rates capitalising on the helplessness of the people in need of money. "They charge over 30 per cent of interest on their loans," he added.
However, according to sources at Bangladesh Jewellery Manufacturers and Exporters Association (BJMEA), the demand for gold ornaments had been going down rapidly for the last one and a half decades.
A recent study of BJMEA shows that the annual demand for gold ornaments within the country came down to only 12 tonnes, less by 17 tonnes than those few years ago.
When asked about the claim of the Old Dhaka jewellers, BJMEA president Anwar Hossain disagreed and said no national of the country could do such business defying the laws of the land.
"Besides, these jewellers do not have any standard arrangement for storing the precious metal. So how can we support their business?" he added.
Mr Hossain urged the goldsmiths involved in such business to stop doing such illegal practices.
"Today or tomorrow, mugging or other similar occurrence might happen. What will the jewellers do then? So we cannot support such business."
The association president also urged the concerned authorities of the government to take legal steps to stop such transactions taking place under the cover of jewellery business.