The Gem & Jewellery Export Promotion Council (GJEPC) hosted the who's who of Banking, Gem & Jewellery Trade and Ministry of Finance officials at the Diamond, Gem & Jewellery Banking Summit 2014 held at the Taj Mahal Palace Hotel, Mumbai

GJEPC organised this summit to bring together senior officials from the Banking, Gem & Jewellery Trade and Ministry of Finance to discuss, aspects and present issues on financing for the Gem & Jewellery Sector; look at the current scenario of ECIB and Credit Guarantee in Gem & Jewellery industry and other burgeoning issues faced by the industry with regard to banking & finance for exports for the sector

During the inaugural session, Dr. Gurdial Singh Sandhu, Secretary, Financial Services, Ministry of Finance, GOI said that, "In context to the current global economic scenario, the Indian industry needs to adopt international practices whole heartedly, to grow both nationally and internationally. The government of India was compelled to act stringently in the larger interest of country by raising import duty on gold and introducing 80:20 gold import guidelines. The new Central Government is determined to serve the needs of all industries and we hope its full cooperation and support for the same by announcing more developments in the coming days."

He also added by,saying that" export is a priority sector for the government of India and necessary steps will be taken by the Government to ensure its growth in the international market."

On this occasion, Mr. Vipul Shah, Chairman, GJEPC, said, " I am priviledged to address the Banking, Gem & Jewellery Trade and Ministry of Finance officials and have the honour to organise this Diamonds, Gem & Jewellery Banking Summit 2014 again after a successful summit in 2013 which the industry and the financial institutions of the country, who are ideal and equal partners to our business to create business synergies. I would also like to thank all the banks and financial institutions who have helped this industry in its journey over the last four decades. If we have found out some concrete directions about how to increase that synergy, trust and confidence, then we have earned the day."

At the summit, both Mr. S.S. Mundra, Chairman, Bank of Baroda and Ms. Arundhati Bhattacharya, Chairman, SBI, rightly pointed out that industry players need to be more transparent in operating their business operations and more compliant in the context to the changing banking scenario in both national and international markets. Ms. Bhattacharya also pointed out that the industry needs to maintain 3Cs: Confidence, Corporatization and Collateralization. She also stressed on the fact that the change in international banking scenario will also impact the Indian banking scenario which the industry needs to understand.

Both the leading bankers have expressed their full confidence in the Gem and Jewellery industry and they strongly believe that this industry has full potential to strengthen its leadership position in the international market and can further attract Foreign Direct investment in the country. However they too expressed their deep concern that certain market events happened in the industry post 2008 global economic recession which have created a large trust deficit between the bankers and the industry. Both also believe that the future of the industry seems to be positive as demand for Gems and Jewellery items both in the Domestic and International market has shown improvement. The current collective challenge is to uphold the trust shared between the bankers and traders and further need to strengthen the same to ensure this decade long fruitful association continues in the future. It is also a good sign that bankers too feel that they need to interact with the Government to discuss the issue of financing the consignment sale of jewellery from Special Economic Zones, especially SEEPZ at Mumbai..

The panel discussions clearly indicated that bankers in the current scenario of occurrence of many NPAs strongly feel that the industry now needs to be more transparent in their business operations. Due to lack of transparency in the industry, the confidence of bankers has been shaken which is making them reluctant to finance this industry to a large extent. Whereas the industry on the other hand feels that it is high time bankers initiate procedures to share and adopt best practices for each others to minimize their risks.

The Bankers were also really concerned about ECGC's refusal to do ECIB policies for enhanced credit limits. Whereas everybody agrees that this is not the ideal situation and will be a big hindrance in growth of exports, there is a general disagreement on who will take the risk ultimately, the banks or ECGC. The Industry clearly believes that , whereas banks cannot outsource their due diligence obligations and mitigate risks by only taking policies from ECGC on exporters turnover, at the same time ECGC should have adequate paid up capital from government to provide requisitecovers to the high value industry like the Gem and Jewellery industry.

Mr. N. Shankar, CMD,.ECGC stated that they need to limit their exposure to a particular industry and also cannot take the ECIB cover at its face value, which is sanctioned by the banks. However, he has promised to take up the issue of increase in capital and deduction of exposure limit from 50% to 40% which would further ensure the growth in the industry. The decision of introduction of multi-buyer policy has also been well received by the industry.

Bankers need to carefully and minutely follow the due diligence procedures and employ personnel for regular interaction with the industry. Banking developments like BASEL III regulations and provisioning of extra capital for unhedged foreign exposure by banks has impacted the industry. Bankers strongly feel that the track record of the promoter of the company needs to be assessed and examined carefully before financing his/her company.