PNB scam : Jewellers find availing funds from banks a challenge after Nirav Modi, Mehul Choksi fraud

Chennai: Jewellers are facing challenges in availing funds from banks following the PNB fraud case in which diamond traders Nirav Modi and his uncle Mehul Choksi are allegedly involved, a top industry official said on Tuesday. Nirav Modi and Choksi are being investigated by the Enforcement Directorate (ED) for allegedly cheating Punjab National Bank (PNB), the country’s second largest lender, to the tune of more than $2 billion or over Rs 13,000 crore.

“Major challenge today we face is funding for the industry. Our immediate requirement is around Rs 15,000 crore. Earlier some jewellery retailer went bankrupt. After Nirav Modi issue, the issue has gone up pan-India,” Gem and Jewellery Council vice-chairman Anandha Padmanabhan said.

The ED recently moved a special court in New Delhi, seeking to declare Nirav Modi and Choksi as ‘fugitive economic offenders’ and to confiscate their assets worth Rs 3,500 crore. Padmanabhan said the banks have stopped issuing loans to traders after the “recent developments.” “Because of these issues, our expansion plan has become slow. Banks ask some big jewellers to pay loans as instalments and even some traders pay about Rs 10 crore, Rs 15 crore as instalments. They encourage us to close the existing loans and not keen on renewing,” he told reporters. [caption id=“attachment_4380033” align=“alignleft” width=“380”]  File image of Nirav Modi from official website.[/caption] Responding to a query on what was the industry’s request to the financial institutions, he said, “We requested them to ease the norms. Today they have completely frozen it. If I want to open three-four branches, I need bank support. Banks are not coming forward.” To open one branch, financial assistance from banks would be for 75 percent and the remaining 25 percent would be raised by the jeweller, he said. The argument from banks was that every jeweller is ‘misusing’ the funds, but not everybody is doing that, he said. To another question, he said the gems and jewellery industry was valued at Rs two lakh crore with annual growth of 7-10 percent. Padmanabhan and top office bearers of the GJC were here to conduct the ‘Labham’ conference which witnessed participation of several traders of the industry. The GJC along with other associations would conduct the annual three day ‘B2B fair – Gems and Jewellery India International Fair – here from 21 September, he added.