Banks told to fund legitimate jewellers |
Indian Commerce and Industry Minister Suresh Prabhu has urged banks to step up lending to legitimate gem and jewellery players who are bonafide, transparent and above board, provided there`s proper risk-mitigation mechanism.The gems and jewellery sector is facing funding issues after the Reserve Bank of India in March banned the issuance of letters of undertaking (LoUs) and letters of comfort (LoCs), used extensively for trade finance, following the Rs 13,000-crore PNB scam involving diamantaire Nirav Modi. There is a need to have a banking system which understands the gem and jewellery industry and supports its growth without taking any undue risk, he said. Gold, gems and jewellery and diamond give huge employment opportunities in India. So, there is need to have a banking system that understands the business properly. Banks should not take any undue risk, which are not understandable and quantifiable,”Prabhu said at an event organised by the Gems and Jewellery Export Promotion Council (GJEPC). Prabhu urged banks to have proper risk-mitigation mechanisms in place to avoid any potential frauds.
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