SBI will sign a memorandum of understanding later this month with the Gems and Jewellery Export Promotion Council (GJEPC), to use the latter’s data bank for credit assessment of their members.
After the $2-billion PNB-Nirav Modi scam broke out in January 2018, the GJEPC created a database of jewellery exporters, revised daily. With a registry of around 6,000 entities, MyKYC, as it is termed, has complete details of jewellery exporters from India and their clients abroad. Even if exporters ship a consignment to own factories abroad, the detail is on MyKYC. “We have tied up with leading trade associations in India, Antwerp, Hong Kong and elsewhere across the world to provide details of jewellers to update MyKYC. SBI and other banks, in addition to the ministries of finance and commerce, were happy with our efforts. We will be signing an MoU with SBI later this month, followed by other PSBs,” said Colin Shah, vice-chairman at GJEPC.
Banks have strengthened compliance rules and cut loan exposure to the entire jewellery sector since the scam. This created working capital problems for exporters. Overall bank exposure to the gems and jewellery sector is now Rs 40,000 crore, from around Rs 80,000 crore in January 2018.
To ease the sector's working capital problems, bankers have set up a committee of creditors, chaired by SBI, with members from other PSBs and the trade.
“Once the MoU with the SBI is signed, more members would get registered with MyKYC,” said Sabyasachi Ray, executive director, GJEPC.
One hope is that successful implementation of MyKYC for exporters could mean its extension for domestic jewellery manufacturers and retailers, too.