Ray denied that the Nirav Modi
scam has made banks tighten
their purse strings
KOLKATA: The rupee devaluation over the past three months and liquidity tightening where banks have choked up the standby credit to the gems and jewellery sector have hurt the trade as their working capital limit spiked as it depends largely on imported raw materials
The sanctioned credit limit to the gem and jewellery sector is around Rs 65,000 crore. Of this, Rs 57,000 crore is the usable limit.
“Banks have definitely become cautious about lending to the sector but they have not stopped the credit flow. Banks are lending on a case-to-case basis. However, the standby credit which the bank managers used to release have dried up which is a matter of concern as rupee devaluation is impacting the working capital requirement of the trade. We are in talks with the banks and finance ministry to work out the lending norms to the gem and jewellery sector,” Sabyasachi Ray, executive director, Gem & Jewellery Export Promotion Council (GJEPC) said at a press conference in Kolkata on Tuesday.
Ray denied that the Nirav Modi scam has made banks tighten their purse strings. India manufactures close to 70 per cent of world’s polished diamonds in terms of value and 92 per cent in terms of numbers. “We have attained this position after toiling for years. The entire industry cannot suffer because of one or two fraudulent cases. We have to make banks understand that not all exporters are violating rules and taking unscrupulous routes to get bank finance. SBI and IndusInd BankNSE -0.66 % are the two major lenders to the trade,” Ray said. While the negotiation is underway on bank finance to the sector, the trade is open to the idea of higher collateral in the range of 30-40 per cent.