No form of legal structure exists to standardise and regulate the time-honoured trade of lending money through mortgaging of valuable jewelry made of precious metals such as gold despite the fact that a great number of people are still associated with the trade.

According to traders in the gold mortgaging business, despite immense susceptibility associated with this delicate business, the entire transaction is conducted by using long-established process dating back to the British era as modern

regulation or guideline has not been adopted for the industry yet.

Even though this traditional brand of business has survived through a large number of traders who are scattered throughout the country, the most well-known marketplace of this business is located at Tantibazar in old Dhaka.

The labyrinthine alleys and ancient buildings of Tantibazar house the largest assortment of gold jewelry mortgage shops. Around 250 to 300 such shops are located here.

According to Babul Dash, former chairman of Banik Samity, the mortgage lenders are being victimised by legal loopholes due to the absence of any guideline for the business.

"We, the traders, are probably the biggest victims as we have to cope with frequent nuisance and disputes with our customers as no form of law or legal guideline exists to regulate or standardise these form of transactions," said Babul Dash.

"There is also a breed of unscrupulous lenders who are taking advantage of this situation to harassing customers and thus making the whole industry look bad," he added.

According to traders, Tk 10,000 is lent against each tola (bhori) of local gold while the amount of goes higher to as much as Tk 12,000 against foreign gold. The mortgagers have to make monthly payments at 3 percent interest rate over the amount of money borrowed.

If the borrower fails to make payments for three consecutive months, the mortgage agreement will be breached and the lender would have the authority to and sell the mortgaged jewelry.

According to prevailing guidelines, relevant information such as name, address and contact information of the borrower along with date of transaction and amount of money are written on a piece of memo, which is later signed by the borrower. The borrower has to reclaim his property by putting his signature in the same piece of paper.

A card with all the relevant

information of the transaction along with a taxation stamp of Tk 4 affixed on it is handed over to the original owner of the mortgaged item. Traders refer this card as the certificate of mortgage.

Although the traders have the authority to melt the mortgaged gold in the event of a breach of contract, the liquefying process is done through a very delicate process, said a trader seeking anonymity.

"We keep individual files of each borrower. When the borrower fails to pay the money for 3 consecutive months, we inform them of the breach through a registered letter and than contact them over telephone. We chronologically record all the sequences of interaction in their relevant files for future reference," he said.

"When the total amount of money borrowed and the instalment exceeds the original value of the mortgaged gold, the jewelry is torn into pieces. We also take pictures of the jewelry before splitting them so that we can reproduce those if required in the future," he added.

According to the traders at Tantibazar, this brand of trade has been in existence since the onset of the British period and the customary guidelines that

are followed in this business has also been originated from that time.

"We used to need a special authorization from the local magistrate to do this business a while back, but now all we need is a trade licence. The magistrate ceased to provide that authorisation since 2001 as there used to be huge arguments and hassles over the matter," said Babul Das, former chairman of Banik Samity.

According to babul Das, only respected wealthy traders with great esteem and reverence used to take up this business during the early days of the trade. Historical figures like Kartik Sen was one of the most prominent figures in the trade during that period.

"However, under the current situation, anyone can get into this business just by collecting a trade licence from Dhaka City Corporation," said Babul Das.

"This industry desperately needs new tangible guidelines and regulations as a section of unscrupulous traders are taking advantage of the situation and making us look bad although we have been in this business for generations," he added.