India’s largest Public Sector lender State Bank of India (SBI) is pushing to bring about uniformity in its lending practices to the gems and jewellery sector, where lending growth has been largely muted following incidence of frauds, as per a report in FE.
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SBI was working on a policy framework to standardise lending practices to the Indian gems and jewellery sector and was looking forward to extend it to other banks through Indian Banks’ Association.
PN Prasad, SBI’s deputy managing director, commercial clients group -1, said that the present SBI’s exposure to the gems and jewellery sector was $3006.28 mln and exposure to the diamond industry was $871.82. “This low exposure to the sector was mainly because of a distrust created between lender and the borrower,” Prasad said.
”In most cases borrowers have not been compliant with the norms and not many revised proposals do come in after a proposal is rejected on non-compliance ground,” Prasad said, adding, “till 2008 SBI’s branch at Mumbai, catering exclusively to the diamond sector, had zero NPA. But lots of misery has happened to the banks for uncouth practices of the sector”.
At present however, around 60% -70% of the gems and jewellery units have moved to corporate structure. SBI is persuading for a neutral, impartial valuation policy for diamonds, while it is also looking for the Export Credit Guarantee Corporation (ECGC) to finalise the new policy for insurance cover.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough & Polished
