Bank of Baroda to finance MSMEs in diamond cutting, polishing sector at competitive rates

Mumbai, Feb 10 (KNN) In a move that would help the MSMEs in diamond cutting and polishing business, the Bank of Baroda is planning to come up with a supply chain financing product for the industry in Surat.

The product will be launched on a pilot basis for the cutting and polishing units, which procure roughs from large companies and supply finished products back. They will be provided finance at a competitive rate of interest.

While addressing a seminar recently, Rajneesh Sharma, General Manager, Bank of Baroda, said this move is expected to give a boost to MSMEs as well as the corporate segment within the diamond industry.

The product will be launched in the next 10-20 days.

India polishes about 14 out of every 15 diamonds in the world; over 70% in value of diamonds.

The Gems & Jewellery Export Promotion Council (GJEPC), during a seminar organized by it on financing, has said that to make the sector further organised, and to enable banks to get concrete information to do the right due diligence while sanctioning credits, GJEPC has intensified measures for corporatization of MSME units in diamond cutting and polishing, Pandya said.

Bankers have a great opportunity to provide financing for the MSME sector, which constitutes one third of the total business thereby bringing them to the mainstream. One of the important steps taken by the GJEPC to further improve transparency in transactions in the sector is starting a KYC online networking platform for the diamond industry.

It said different banks charged different rates which ranged between LIBOR + 2% to LIBOR +6%; and added to that were other charges. Banks using ECGC cover as that added to the  burden and had, in some cases, raised the cost of finance by five times. There is a need for a standardized structure.