Jewellery MSMEs faces financial crunch; GJEPC and SDA to knock Centre’s door over term loan issue
New Delhi, Apr 11 (KNN) On refusal of banks to provide term loans to small and medium units (SMEs) in the diamond sector, the Surat Diamond Association (SDA) and the Gems and Jewellery Export Promotion Council (GJEPC) has decided to take the matter to the finance Ministry, Government of India.
With detailed representation on Public sector banks for not providing loans to the diamond unit owners from Surat, SDA and GJEPC will be approaching finance Ministry.
In a recent statement SDA and GJEPC stated that many small and medium units are facing difficulties in getting loans from Public sector banks under the Prime Minister Mudra Yojana (PMMY) and other bankable government schemes.
It also stated that in the recent past, there have been large numbers of cases where public sector banks have denied loan amount of Rs 10 lakh to the diamond unit owners from Surat.
Jewelers are facing working capital crunch as banks have squeezed the financing to diamond industry. This follows the 127 billion Punjab National Bank (PNB) scam involving mastermind billionaire Nirav Modi and Mehul Choksi.
Further, Bank branches have been intimated not to process fresh letters of content (LOCs) and letter of undertakings (LoUs).
In order to address working capital needs, industry requires more funds and thus in this direction
GJEPC regional chairman Dinesh Navadiya said that we are preparing a detailed representation as to why the ministry of micro, small and medium enterprises (MSMEs) require capital, denial by the banks and other issues in order to show the complete reality to them.
He said that in most of the cases banks ask for 50% collateral in disbursing loan amount which has made the things difficult for the borrowers.
SDA president Babu Gujarati said that without the support of Indian banking system, MSME sector will not be able to survive.
He further added that banks are violating PMMY scheme by not sanctioning loans to diamond units as there are provisions for term loan under the scheme.
He said that we want Central government involvement in this matter to instruct public and private sector banks to lend MSME unit owners under PMMY.