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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

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costlierby5%onroughprice
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Diamondfinancing:IndusIndjumpsinwhereotherbanksshyaway|BusinessStandardNews

Newsmaker:SavjiDholakia
Jewellerysharesrallyasgovt
easescurbsongoldimports

RomeshSobti,managingdirector,IndusInd,toldBusinessStandard

'Roundtrippingofjewelleryon
therise'

theyhadverylowdelinquenciesinthisportfolio.Ourpartnershipwith

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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
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Diamondfinancing:IndusIndjumpsinwhereotherbanksshyaway|BusinessStandardNews

andtherewasconcernaboutsellingonaconsignmentbasis,aswellassalestoassociates.
Also,saybankers,theyhadcomeacrossinstancesinwhichfundsdisbursedtoG&Jcompanieswereusedin
thecapitalmarketandinrealestate.

READMOREON

INDUSINDBANK

GOLDJEWELLERY

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