The Nirav Modi scam is hurting jewellers in a big way. Banks are declining loans to them after the ₹11,400-crore fraud and this has hurt their operations as well as expansion plans in the last six months.

The recent default on chit fund programme by a city-based jewellery firm Nathella Sampath aggravated the situation for the gem and jewellery industry, said N Anantha Padmanaban, Vice-Chairman, All India Gem and Jewellery Domestic Council.

Nearly 75 per cent of funds to the jewellers is provided by banks and the balance 25 per cent is accrued through internal resources. Finance flow from banks has completely stopped now, affecting expansion plans, he said. A mistake by a couple of persons has affected the entire industry, he told newspersons on the sidelines of ‘Labham’ programme, an educational seminar on compliance and best business practices.

The Council represents over 6 lakh players across various segments, including manufacturers, wholesalers, retailers, distributors, laboratories, gemmologists and designers, in the gems and jewellery industry.

“With the backing of the Commerce ministry, we have represented this issue to the Finance ministry,” he said, adding that the immediate demand for the industry is ₹10,000 to ₹15,000 crore.

After the two major frauds, every file is being checked by the banks, who are also asking for quick repayment of loans that too in bulk, he said. “Everybody is being suspected in the industry,” he added.

On Goods and Services Tax (GST), Jayantilal J Challani, President, The Madras Jewellers & Diamond Merchants’ Association, said it was the best that could happen for the industry. Today, 95 per cent of the jewellers are in the organised sector as against 75-80 per cent a year back. The balance 5 per cent of them will come in to GST soon, he said.

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