GJEPC held a webinar on 27th May with the aim of understanding the perspective of bankers who finance the gem and jewellery sector. The panellists included Ranvir Singh, DGM and Branch Head, SBI, Diamond Branch, Mumbai and Narayan Singh Deora, Zonal Manager, Bank of India, who were joined by Manish Jivani, MSME Convener, GJEPC. The discussion was moderated by Mayank Bajaj, Director, Bajaj Advisors.
Below are some key takeaways from the discussion:
* Transparency is of prime importance; the banker should be treated like a partner and must be kept informed of all stress points in the business.
* There has been a 13% growth in bank credit in the last 6 months from $7.57 billion in September 2020 to $8.57 billion in March 2021. Industry performance is directly proportional to bank credit. In March 2021, gross bank credit amounted to 34% of total industry export turnover of $25.29 billion.
* For bankers, collateral is a secondary consideration, the first priority is a strong balance sheet and a healthy business.
* LGDs’ financial potential is the same as natural diamonds. Although the base is small, it is growing at 100%. For bank finance, LGD rules and modalities should be defined clearly. GJEPC is ready to sit with bankers and set up a module to tap the sector’s potential in terms of generating jobs and earning foreign revenue.
* The trade is in a good position today mainly due to the support of banks. For instance, BOI has not reduced any corporate limit in the past one year, and SBI has no intention to reduce exposure to the sector.
* Companies need to hire capable, experienced, knowledgeable professionals to handle their finance department as the requirements have risen in the past few years.