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Banks not lending to players in gems and jewellery sector: GJEPC

Loan applications were getting rejected even though SMEs were offering collaterals

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Players in the gems and jewellery sector have complained that, of late, banks are not giving them loans, which is hindering their expansion plans. However, bankers told dna that while there was no blanket guideline on the part of the banking regulator or bank managements, individual banks may be limiting their exposure to the sector after the recent PNB scam.

"In the past few weeks, I have got over a dozen complaints that banks have refused loans to SMEs," said Dinesh Navadia, regional chairman of Gems and Jewellery Export Promotion Council. "If large borrowers have siphoned off the money, it does not mean banks should become so cautious that even genuine businessmen are deprived of the liquidity."

He said loans applications were getting rejected even though SMEs were offering collaterals. "I have applied for a loan of Rs 10 lakh under MUDRA scheme. I have orders in hand. I want a new machine. It needs to be imported from Italy. But a leading Public Sector Bank (PSB) rejected my application. I even offered a FD of Rs 5 lakh and proposed that instead of paying me, the bank can directly pay the machinery exporter, but the loan was refused," said Jayantibhai Savalia, owner of Dfine Jewellery. Surat.

Navadia said he had written a letter to local MP CR Patil about the crisis. According to him, the government should act in the matter as the sector creates many jobs.

A senior PSB official said: "This may be done on case to case basis. If banks have high exposure in this sector and have lots of bad loans then, they might have curtailed the lending. But as such there are no such mandates."

THE ISSUE

  • Loan applications were getting rejected even though SMEs were offering collaterals.
     
  • Local MP CR Patil has been apprised of the crisis.
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