Bitten Bankers' Cautious Optimism For G&J Sector

Industry should show bona fides:

The gems & jewelry sector and the banking industry are trying to overcome the crisis of confidence created in the wake of the PNB loan scam done by diamantaire Nirav Modi’s firms. The Gem & Jewellery Export Promotion Council (GJEPC) recently organized a seminar in Mumbai titled ‘Diamond and Jewelry Financing 2018: Mitigating risks effectively’ to discuss the current situation and explore ways to mitigate future risks.

Participating in the discussions, Dinesh Khara, MD, State Bank of India, said the Indian gems and jewelry industry must show whatever they commit to get finance from the banks. The borrowing cost has increased for the industry in the last few months because of discontinuation of LoUs and LoCs due to recent banking frauds, which is nothing but direct risk-and-reward relationship at which banks do the pricing, he said, adding: “Funding cost to the gems and jewelry sector is likely to remain high as long as the industry is seen risky in view of the recent frauds by a diamantaire’s firms. Improvement in the profile of gems and jewelry sector in terms of financial, conduct and practices will have to be seen on ground, and only then will the banks get the confidence to provide further support to the sector. As a lender the bank appreciates the initiatives taken by the council to mitigate concerns of the banks.”

ISSUES FACING BANKS