State Bank of India said that the gems and jewellery industry should have insurance cover for banks to “lend courageously” to the sector.
The Deputy Managing Director of India's largest lender, PN Prasad, said that the presence of an insurance cover will also lower capital requirement of the industry for jewellery exports.
“Absence of an insurance cover is hurting lending to the gems and jewellery industry by banks,” he said. “If there's an insurance cover, it will help the bank to lend courageously to the sector.”
Speaking at an event in Kolkata today, he said SBI's exposure to the jewellery industry is around Rs 20,000 crore, adding that the lending growth to the sector has been muted at present.
The bank official said the “trust of the bankers on the gems and jewellery industry is not there” because of its practices “which caused misery to the banks”.
Fugitive diamantaire Nirav Modi has allegedly defrauded state-run Punjab National Bank of over Rs 14,000 crore.
The gem and jewellery industry should be more transparent in terms of ownership, management and valuation, Prasad said.
Some kind of credit guarantee will give freedom to the gems and jewellery exporters in the MSME segment, he said.
Prasad also said gold should be treated as a source of investment in the country. “For that, there is a need to create awareness among the public.”
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