SURAT: Following reports that the
State Bank of India (SBI), one of the largest lenders to the
gems and jewellery sector, is serious on tightening the noose around the
borrowers by
increasing the collateral by almost 50%, a delegation of the
Gems and Jewellery Export Promotion Council (GJEPC) called upon the
bank chairman and other senior officials on Tuesday.
GJEPC’s delegation led by chairman Pramod Agarwal met SBI chairman Rajnish Kumar and chief general manager P N Prasad.
The SBI chairman is learnt to have assured the industry leaders that the bank is only looking at risk mitigating issues for the finance extended to the sector and is not taking any measures in the short run.
In an important move, SBI and GJEPC will be working together on the amendments of the bank’s credit policy with the diamond sector in order to bring in strong risk mitigation measures without harming the operations and export growth of sector.
As per the reports, SBI had recently decided to increase the collateral to around 50% for the borrowers from the gems and jewellery sector, which have been in the eye of the storm following the multi-crore banking scam involving Nirav Modi and Mehul Choksi. The bank is also learnt to have reviewed all the loans given to jewellers to find out whether adequate safeguards were taken while giving the loan.
In case of divergence, the bank also wrote to its borrowers to raise the collateral level to at least 40-50 per cent of the loan value or cut the size of the borrowing by half.
Talking to TOI, GJEPC chairman Agarwal said, “The meeting between GJEPC and SBI happened in a very cordial atmosphere and the industry was reassured of the strong partnership of SBI on growth of the industry which ultimately helps to enhance the employment and exports of the country.”
