Jewellery chains under scanner post PNB scam

SBI’s total exposure to the gem and jewellery sector was Rs 12,408 crore as of March 2019, out of which Rs 797.59 crore loans were classified as NPAs

Post By : IJ News Service On 10 June 2019 10:56 AM

Following the PNB, Nirav Modi and Mehul Chokshi scam last year, Indian banks have tightened their exposure to the entire gem and jewellery sector amid liquidity issues faced by south Indian jewellers. According to data released by Reserve Bank of India, total loan outstanding to the gem and jewellery sector declined to Rs 85,281 crore as of December 2018 from Rs 90,495 crore in March 2018. Non-performing assets (NPAs) in the jewellery sector also fell to Rs 20,135 crore in December 2018 from a high of Rs 23,887 crore.

As of December 2018, 23.61 per cent of the exposure of banks was reported as bad loans against 26.39 per cent in March 2018. State Bank of India, India’s largest lender, said in the case of non-corporate borrower, the bank decided to cap exposure to Rs 100 crore for single borrower and Rs 200 crore for group exposure. In the case of corporate borrowers, SBI has capped the exposure at Rs 400 crore for single borrower with BBB rating and above, Rs 100 crore for borrower with BB rating and Rs 50 crore for borrowers without rating. SBI has capped group exposure at Rs 1000 crore.

SBI has classified all new exposures beyond Rs 100 crore under consortium lending only. If existing exposures are under the multiple banking, it will be brought under consortium lending only. SBI’s total exposure to the gem and jewellery sector was Rs 12,408 crore as of March 2019, out of which Rs 797.59 crore loans were classified as NPAs. While its exposure marginally declined from Rs 12,693 crore in the previous year, NPAs fell from Rs 2,242 crore in March 2018.

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