Bankers want jewellery industry to become more transparent, compliant to regain trust after Nirav Modi, Mehul Choksi scam

Mumbai: Bankers are not averse to financing the gems and jewellery businesses, however, they feel that the industry needs to become more organised, transparent and compliant to regain trust.

“Incidents like the Nirav Modi and Gitanjali Gems have broken down the trust level for the gems and jewellery industry. There is a need to build trust by becoming more transparent and complaint,” Union Bank of India chairman Kewal Handa said on Tuesday at the 2-day Manthan Gems and Jewellery Conclave 2019 here.

He said the gems and jewellery industry should learn from the pharmaceutical industry, which had taken steps like becoming more compliant, getting international accreditation and building stronger federation. “Pharmaceutical industry has completely reformed themselves and set up systems and processes for getting more organised,” he added.

The current liquidity crisis in the gems and jewellery industry and bank’s non-performing assets have coincided affecting the lenders giving loans to the industry, he said. By the end of 2017, the bank financing to the gems and jewellery industry was at Rs 70,000 crore, which has now come down to less than Rs 30,000 crore, he added.

IndusInd Bank EVP Biju Patnaik, who was also present on the occasion, said the gems and jewellery business funding is complex. “The primary collateral is stock and it is more about inventory financing as the collaterals are moving stock—don’t remain with the lender,” he added.

NSE managing director and CEO Vikram Limaye said, NSE overcame several challenges by the adoption of technology, focus on customer, compliance and strong market development. These are relevant to jewellers too,” he added.

NSE is keen to develop a Gold Spot Exchange with the right structure, he said, adding that commodity exchange needs to have more participation from all key stakeholders.

Courtesy: FirstPost