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Diamondfinancing:IndusIndjumpsinwhereotherbanksshyaway|BusinessStandardNews
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Diamondfinancing:IndusIndjumps
inwhereotherbanksshyaway
Becomesthelargestpvtsectorlenderinasegmentthatmostbankshaveexited
MSaraswathy&AbhijitLele|Mumbai
April14,2015LastUpdatedat00:50IST
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IndusIndBanksacquisitionofthediamond/jewelleryfinancingbusiness
ofRoyalBankofScotland(RBS)inIndiacomesaftermostlendershave
exitedthesegment.
IndusIndagreedtothedealforRs4,500crore,becomingthelargest
privatesectorlendertothesegment.Thiscomesatatimewhennon
performingassetsareseeingasharpriseinpublicsectorbanks(PSBs)
fromthegems&jewellery(G&J)sector.
IndusIndBank
ALSOREAD
Diamondjewellerytobecome
costlierby5%onroughprice
rise
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1/9
17/07/2016
Diamondfinancing:IndusIndjumpsinwhereotherbanksshyaway|BusinessStandardNews
Newsmaker:SavjiDholakia
Jewellerysharesrallyasgovt
easescurbsongoldimports
RomeshSobti,managingdirector,IndusInd,toldBusinessStandard
'Roundtrippingofjewelleryon
therise'
theyhadverylowdelinquenciesinthisportfolio.Ourpartnershipwith
Ads
skillsandknowledgeinthisbusiness.Ourbookisseeingagrowthof45
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ABNAmro(whichranthisline,underRBS)willhelpusgettheirglobal
said.
Headdedallemployeeswillmovetothebankandasthebusiness
expands,theywouldhiremoreforthesegment.
AreportbyNomuraonthedealsaidtheriskcouldbeofhigh
delinquencyinthediamondbusiness,giventheexperienceofPSBs.
However,thereportsaid,IndusIndsmanagementindicatedthelending
istotopmarqueenamesinthediamondbusinessandhistoriccredit
costshavebeenlowinthisbook.
Datashowthatabout5.3percentpfPSBsexposuretotheG&JsectorwasnonperforminginMarch2013.In
21months,byDecember2014,thishadgrownto14.4percent.
Indianbanks,especiallyPSBs,haveremainedwaryofincreasingtheirfinancialsupporttothissegment.
BesidestheNPAchallenge,lackoftransparencyinoperationsanddiversionoffundswerealsoseenas
problemsintieswithjewellers.
AccordingtoReserveBankofIndiadata,the
paceoflendingtotheG&Jsectorhad
deceleratedto4.9percentgrowthinthe12
monthsintoFebruary2015,comparedto17.8per
centgrowthintheprevious12months.Thecredit
duestothesectorwereRs73,100crorein
February2015.
RecentcaseslikeWinsomeDiamonds,where
bankstookahitofaboutRs6,000crore,have
beenacauseofworry,duetowhichbanksare
choosingtostayawayfromthisbusiness.Indian
jewelleryfirmsarefindingitincreasinglyhardto
getcreditfrombanks.
PSBexecutivessaidinterminglingofbusinessesgold,diamondsandjewellerymadeitdifficulttoseparate
thebusinessstreamsandunderstandtheirworking.Also,somecompaniesweredoinginterestratearbitrage
http://www.businessstandard.com/article/finance/diamondfinancingindusindjumpsinwhereotherbanksshyaway115041300914_1.html
2/9
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Diamondfinancing:IndusIndjumpsinwhereotherbanksshyaway|BusinessStandardNews
andtherewasconcernaboutsellingonaconsignmentbasis,aswellassalestoassociates.
Also,saybankers,theyhadcomeacrossinstancesinwhichfundsdisbursedtoG&Jcompanieswereusedin
thecapitalmarketandinrealestate.
READMOREON
INDUSINDBANK
GOLDJEWELLERY
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