India’s largest private lender State of Bank of India has become the country’s first bank to come up with a policy to fund makers of the man-made stone. This show of reliability on the lab-grown trade will definitely improve the brand value of lab-grown diamonds. It will bring a factor of credibility and reliability to the LGD sector in the gems and jewellery industry.

Surat is the manufacturing hub of CVD diamonds or those which are made ni a laboratory using Carbon Vapour Deposition technique. The US has a growing market for LGDs as these diamonds as they are priced much lesser than their natural counterparts. Through grown in a laboratory these diamonds are similar in all aspects to a natural diamond. There is no evident or non-evident difference in its chemical formulation. Thus the LGD sector is gaining ground by the day in the US.  

The public lender had formalised a policy to fund units engaged in manufacturing of lab-grown diamonds a few weeks back, but under certain conditions. It would be largely term loans for machinery import, an SBI source informed ET.

The bank’s operational guidelines for financing man-made diamond houses include the standard prudential practices like "treating non-fund limits at part with funded limits", critically looking at the "dependency on single buyer as percentage of annual sales", obtaining business credit report on overseas buyers from agencies like Dun & Bradstreet, and getting hold of audited balance-sheet of buyers which are house companies and foreign clients.

Very little would be disbursed as working capital. To begin with, (SBI's) Diamond Bourse branch in Mumbai Bandra Kurla Complex and the Commercial branch in Surat have been identified for the business. Also, borrower's exposure to foreign currency has to be fully hedged except where natural hedging is available, the source shared. The bank was evaluating the volatility in price of man-made stones before making a foray into the business, according to a senior official of a private sector bank, informs Economic Times.

News courtesy to timesnownews.com & image courtesy to Lab Grown Diamond, Surat.