 "Banks ask RBI to frame policy for silver loans similar to gold metal loans")
Several banks have reached out to the Reserve Bank of India (RBI) to seek a framework for silver metal loans similar to the existing gold metal loans, The Economic Times (ET) reported on Friday. An official quoted in the report said that jewellery manufacturers have been asking banks to extend loans for the procurement of silver, silver articles and for jewellery manufacturing.
Under the current Gold Monetisation Scheme, 2015, banks can extend gold loans to jewellery exporters or domestic manufacturers. The loan, equivalent to the value of gold borrowed, needs to be repaid in rupees. But the borrowers also have the option to repay a part of the loan in physical gold in lots of one kilogram or more.
The official quoted above also said that India's silver exports touched Rs 25,000 crore last year, and there is a high demand for credit in the sector.
The latest data from India's Gem Jewellery Export Promotion Council (GJEPC) shows that exports of silver jewellery grew 16.02 per cent during 2022-23 (FY23) to Rs 23,492.71 crore, compared to Rs 20,248.09 crore in the previous year.
"There is an annual growth of around 14-15 per cent in this segment, and it's best if we have a similar framework as that for GML," another official told ET.
The RBI had earlier warned lenders that a lack of proper monitoring mechanisms and not ensuring the end use of GML had resulted in certain instances of fraud by certain unscrupulous jewellers. It had directed banks to assess the credit requirements of gold metal loan customers, taking into account the track record and creditworthiness of borrowers, the trade cycle of manufacturing activities, and the collateral securities on offer, the report added.