Jewellery sector foresees 'ripple effects' post PNB fraud case

The jewellery industry is likely to face some "ripple effects" on credit flow after state-run Punjab National Bank reported fraudulent transactions to the tune of Rs 11,400 crore.
"Some ripple effects are bound to be there and it will have a psychological impact in the minds of lenders. This could impact credit flow to the industry or create delay in extending advances," Gem and Jewellery Export Promotion Council-Eastern Region chairman Prakash Chandra Pincha said today at a jewellery exhibition titled 'Sonar Sansar'.
PNB has detected the scam in which billionaire diamond merchant Nirav Modi allegedly acquired fraudulent letters of undertaking (LoUs) from a branch in Mumbai to secure overseas credit from other Indian lenders.

Pincha, however, said exports of gem and jewellery, and the industry as a whole is not likely to be impacted by the fraud.
Not only bankers, insurance companies, too, could possibly be cautious in extending their services to jewellery exporters after this fraud, GJEPC's former VC and India Bullion and Jewellery Association-West Bengal president Pankaj Parekh said.
"Bank may ask for more collateral before providing credit to jewellers or jewellery exporters. Due to this fraud, the entire industry might be branded as a risky industry. This should not be done," he added.