RBI's Letters of Undertaking ban not to impact Bengal jewellery industry

RBI ban on Letter of Undertaking (LoU) as a trade finance instrument, will not have much impact on the gems and jewellery industry in West Bengal, but a hike in bank's credit margin may hurt the business, a GJEPC official said

PTI March 22, 2018 12:14:20 IST
RBI's Letters of Undertaking ban not to impact Bengal jewellery industry

Kolkata: The RBI ban on Letter of Undertaking (LoU) as a trade finance instrument, will not have much impact on the gems and jewellery industry in West Bengal, but a hike in bank's credit margin may hurt the business, a GJEPC official said.

Pankaj Parekh, former national vice-chairman of Gems and Jewellery Export Promotion Council (GJEPC), said the instrument was used by some jewellers primarily for imports, but there was hardly any import component for Bengal jewellery manufacturers.

RBIs Letters of Undertaking ban not to impact Bengal jewellery industry

RBI's Letters of Undertaking ban not to impact Bengal jewellery industry. Reuters image.

“There will be no impact of the ban on jewellers in this region,” Parekh told newspersons on the sidelines of a press conference last evening to announce a 3-day international jewellery exhibition in Kolkata early next year.

The Bullion Gem and Jewellery Association Secretary (West Bengal) Ravi Karel said earlier the margin sought was 85 percent of the credit, but now they were seeking a margin as high as 150 percent.

Bank lending to the gem and jewellery industry may be "squeezed" in the wake of the Rs 13,000 crore scam involving billionaire diamantaire Nirav Modi. Banks have already started demanding higher collateral from existing borrowers, he said.

“They are wanting more collateral or asking us to reduce the loan amount,” he said.

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

'Act within mandates of Constitution': Mamata Banerjee asks Bengal guv to refrain from ‘surpassing CM’
India

'Act within mandates of Constitution': Mamata Banerjee asks Bengal guv to refrain from ‘surpassing CM’

In a nine-page letter, Banerjee said that the governor Jagdeep Dhankhar's aspersions 'sadly consist of uncorroborated judgments and insinuations' against the police and the state government

NIA arrests nine people with suspected Al Qaeda links from Kerala, West Bengal; firearms, body armour seized
India

NIA arrests nine people with suspected Al Qaeda links from Kerala, West Bengal; firearms, body armour seized

An NIA press release said that the agency "carried out the simultaneous raids at several locations in Ernakulam (Kerala) and Murshidabad (West Bengal)"

Why Bengal’s Murshidabad and Malda are India’s most dangerous districts today
India

Why Bengal’s Murshidabad and Malda are India’s most dangerous districts today

While Bangladesh prime minister Sheikh Hasina has chased a large section of Islamists out, Mamata Banerjee’s Bengal government has created a welcoming gateway for the radicals into her state.