https://economictimes.indiatimes.com/
Diamonds are regarded as the hardest known material on the planet. Going by the mounting pile of loan delinquencies, they seem to be the hardest business for Indian bankers to crack.
Last week, Punjab National BankBSE 0.47 % (PNBBSE 0.47 %) acknowledged an elaborate web of deception that had defrauded the lender, on initial count, of Rs 11,400 crore. PNB’s startling disclosure involving diamond jewellery designer Nirav Modi capped a string of striking defaults by businesses in polished stones, putting the spotlight on the underwriting skills of bankers financing an industry famed for its glitz and glamour.
Among the delinquents are Gitanjali GemsBSE -9.85 %, promoted by Modi’s maternal uncle Mehul Choksi, that owes about Rs 9,000 crore to lenders, Winsome Diamond that defaulted on Rs 6,800 crore, Surat’s Vincent Diamond that caused losses of Rs 4,500 crore and JB Diamond, which defaulted on Rs 800 crore of loans.
The string of failures in India, the hub for cutting and polishing rough diamonds, follows a global downturn in the gems and jewellery industry since the consuming geographies – the richer pockets in the European Union and their neighbours across the Atlantic – were sucked into the subprime sinkhole.
In the aftermath of the 2008 crisis that shook economic systems from Tokyo to Toronto, regulations became markedly stringent and financing to the industry increasingly difficult.
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