Industry bodies to approach banks to finance small diamond units

SURAT: The Surat Diamond Association (SDA) and Gems and Jewellery Export Promotion Council (GJEPC) office-bearers have decided to meet authorities of public and private sector banks as well as Reserve Bank of India (RBI) to impress upon them the need to lend finance to small and medium diamond units.
Following the Punjab National Bank (PNB) scam worth Rs13,600 crore masterminded by billionaire Nirav Modi and Mehul Choksi, public and private sector banks have drastically reduced or squeezed lending to gems and jewellery sector. Many small and medium diamond units are unable to infuse capital to purchase rough diamonds, which are sold for cash in Belgium.

GJEPC regional chairman Dinesh Navadiya told TOI, “Rough diamond dealers in Antwerp have stopped extending credit to small and medium unit owners and they prefer doing business in cash. In such a situation, unit owners are left with no option but to get finance from private lenders at exorbitant interest rates. Profitability in the diamond business is less than 3%, against which the unit owners are unable to survive.”

Navadiya added, “After continuous efforts by industry leaders, a few public sector banks had agreed to finance small and medium unit owners in Surat. But, the multi-crore banking scam has forced banks to take back their decision. However, we have decided to meet banking authorities and RBI for demanding financial assistance to small and medium players.”
SDA president Babu Gujarati said, “Small and medium players are the backbone of the industry. Without finance, they will not be able to survive. Nowadays, all transactions are done in cash and through the banks. We request the public and private sector banks to consider giving finance to small and medium players to help sustain the industry.”
Sources said big diamond companies used to finance small and medium players at as interest rates of 16%. Many companies have stopped giving finance in the industry following the banks squeezing credit lines.
Diamond analyst Aniruddha Lidbide said, “Most small and medium players have been doing job work for big companies. There are diamantaires who are running their units on their own. These people are in dire need of capital to run their units. The banking scam has left small and medium players without finance and this is going to have a big impact on the diamond industry.”
by via Surat News, Latest Surat News Headlines & Live Updates - Times of India