New Delhi, Feb 20 (KNN) Country’s biggest banking fraud has affected the sectors right upto the bottom of the pyramid as well. Raising serious concerns, the jewellery exporters of the country have said that the incident would affect the credibility issues with the bankers and lead to rigorous monitoring process for SME exporters as well.

Since the Winsome Group default came into light, lending to the sectors has been tightened. Now the new case of Nirav Modi and PNB fraud has come into light which was caused due to generation of letters of undertaking in favor of Modi through illegal means.

This has raised more concerns for the jewellery exporters as they believe that issuance of such bank guarantees will now need a rigorous monitoring process and pose problems related to lending for SME industry.

Talking to KNN, Ketan Shroff spokesperson of India bullion and jewelers association said “Credibility of industry is tarnished by this kind of scam and it would take time to recover from such a big loss”

He further said that “it affects the credibility issues with the bankers”

He said, “Banks will squeeze the lending amount for SME after this and it will badly affect the SME therefore it is necessary to scatter the loan portfolio. It’s better to have 1000 customers rather than 10 customers, in 1000 there may be 5, 10, 20 or may be 50 defaulter but if 1 or 2 out of  10 defaults, 10 or 20 % of the portfolio burst out. It’s better to finance small and medium enterprises rather than financing big brands and big people.”

Gems and Jewellery Export Promotion Council (GJEPC) on Feb 17, 2018 in a statement on the Nirav Modi /Gitanjali Scam incident strongly condemned this unlawful and illegal act.

In the statement, GJEPC said “It should be noted that when thousands of exporters undertake business lawfully adhering to all norms and practices, prescribed very diligently, incidents of this kind can only take place due to non-adherence of procedures and norms laid down.”

 The Council strongly believes that the incidence will not have any effect to the Gems & Jewellery Export Industry as these kinds of incidents happen due to the gaps in internal control system and failure or lack of fraud protection measures.

The council further mentioned that the on the one hand GJEPC is trying to find ways to garner financing to Gem and Jewellery exporters, especially the SME Export Sector, who are required to give high collateral for the limit sanctioned to them, and on the other hand this kind of clear advances (LoU) being provided by a bank without any safeguards, that speaks volumes of irregularities that needs to be thoroughly investigated. (KNN/YV)