Liquidity crisis for gems, jewellery sector as Nirav Modi case scares banks
Latest News : The Rs 5-trillion gems and jewellery industry in India is facing a huge liquidity crisis due to the reluctance of lenders to finance working capital loans over fears, which have been sparked by a couple of precedents set in the past few months, of default. Industry sources said that banks have blacklisted the entire gems and jewellery sector and are not funding working capital loans, especially to small and medium enterprises (SMEs), due to insufficient collateral backup for recovery in the case of a default. Banks, according to industry sources, are seeking 200 per cent collateral for working capital loans, with 100 per cent in the form of actual mortgage and another similar amount of stock under their custody. The non-availability of funds has hit small jewellers' operational efficiency, including their sales and expansion plans. Further, a number of small jewellers are on the verge of closure due to the scarcity of capital needed to support their busine...