Can financer legally block my gold loan for personal loan?
I have taken a gold loan from Muthoot. After one year, they offered me a personal loan. Due to certain circumstances, I was unable to repay the personal loan. They have now locked or deactivated my gold loan account against the personal loan. Can they legally do this? A personal loan cannot be given against a gold loan.
Dear Client, A gold loan is secured loan governed by contract, while a personal loan is unsecured; distinct unless contractually linked. The lender can claim rights over pledged gold when the loan agreement includes a cross-default or lien clause and the borrower defaults. The Indian Contract Act of 1872 through its Section 176 allows a pawnee to either keep or sell pledged possessions after the borrower fails to fulfill their obligations. Consumer forums will recognize arbitrary blocking without any contractual basis as a service deficiency that can be challenged. You need to review both the loan conditions and the RBI Fair Practices Code. Relevant documents are provable under Sections 61 and 63 of the Bharatiya Sakshya Adhiniyam, 2023.
They cannot legally block your gold loan for non-payment of a personal loan, since both are separate contracts. A gold loan is secured against your pledged gold, while a personal loan is unsecured. You can write a formal complaint to Muthoot’s branch manager, escalate to the RBI Ombudsman, or send a legal notice asking for release of your gold after paying only gold loan dues. For further legal assistance contact us on our helpline number.
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