Business-Bankers want jewelry industry to become more transparent

Bankers are not averse to financing the gems and jewelry businesses, however, they feel that the industry needs to become more organized, transparent and compliant to regain trust. "Incidents like the Nirav Modi and Gitanjali Gems have broken down the trust level for the gems and jewelry industry. There is need to build trust by becoming more transparent and complaint," Union Bank of India chairman Kewal Handa said Tuesday at the 2-day Manthan Gems and Jewellery Conclave 2019 here.

He said, the gems and jewelry industry should learn from the pharmaceutical industry, who 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 organized," he added.

The current liquidity crisis in the gems and jewelry 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 jewelry 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 jewelry 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 jewelers 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.