From The Desk of Rajesh Bajaj
Nurturing Industry’s Growth Ambitions!!
This ink is just ahead of the announcement of the GJEPC for ‘Banking Summit 2022, Nurturing Industry’s Growth Ambitions! GJEPC aim to table critical financial concerns of the gem-n-jewellery (GJ) industry & trade at the Summit 2022 in the presence of both; banking and financial & GJ stakeholders! Probably by the end of the Summit 2022, GJEPC wishes a take-home that will help the industry grow!
The Banking Summit 2022 has indeed set up at the juncture of several geopolitical uncertainties, the slowdown in the matured market like Europe, Japan & US market. Rocketed inflation rates around the globe, unhealthy supply chains and economic weaknesses in significant global economies.
In the global scenario, the Indian rupee is behaving bravely against tumbling international currencies; RBI has successfully halted the pace of inflation rise, the domestic market is healthy, consumer confidence is reasonable, buying attitude is healthy at those domestic retail front with soft metal price and a series of festivals; wedding season that is extended to 2023 March!
In the above rosy picture, we have lost the domestic saving rate and forex reserve level at a noticeable level! In the scenario, India has set a challenging export target and the GJ eye on the US$ 75bn GJ exports by 2025. Looking at the growth ambitions, it is necessary to nurture the GJ industry, especially from the financial aspect!
Here debate takes place with banking & financial players while asking for finance! In 2016, the GJEPC facilitated and organised the Banking Summit to understand the ongoing trend in finance & banking! At the time, medium size diamantaires needed two, 1: regular rough supply & 2: Finance! In the ongoing scenario, small diamond players shut down their Surat factories.
Altogether about 35% to 40% slowdown had registered in the diamond manufacturing process. The worry of the GJEPC had grown for small & medium size players! Because of their size, they have no adequate proper rating & they do not match to the norms of Banks! Even after offering 100% of the collateral, they face financial issues from Banks. Why? What was the psyche of banking players?
In those days, the Bank fraternity clarified in 2015: ‘Bank players have their theory & system to evaluate any company & its financial health.’ Lessons of such theory stop working on the intermingling of businesses & operations, selling on a consignment basis like practices and alarm sound in the mind of Banks…hazy, unclear, non-transparent & further walk stops, tie hits. And then CMD- BoB, S. S. Mundra expressed a profound remark: “As of today, there is a huge trust deficit.”
Even in 2014, in the council’s response, then SBI Chairperson Arundhati Bhattacharya pointed out these 3Cs: Confidence, Corporatization and Collateralization is not only the demand of the hour but also a road ahead to continue the four decades of journey further! At last, in the year of 2018, the Minister of Commerce & Industry said, “Without taking undue risk, banks should finance the GJ Sector so that the industry can grow & banks also can grow!”
This Summit of 2018, ‘Diamond & Jewellery Financing 2018: Mitigating Risks Effectively!’, had turned the industry, and that summit acquired some fruits of finance! Industry highlighted their will of self-regulation and also highlighted the MyKYCBank project! Made an effective presentation of the MyKYCBank initiative of GJEPC.
The Summit 2018 also earned a Standing Committee (Coordinating) of the bankers and industry & suggestions on the White Paper! And the Summit 2019, Diamond & Jewellery Financing 2019: Redefining Business Strategy, had witnessed the report of P N Prasad, Chairman of the Coordinating Committee.
P N Prasad, MD-SBI, said there is a need for information exchange between stakeholders and the need for conducting due diligence on the part of the bankers! The main problem we noticed was a lack of a uniform approach by all banks towards financing the sector. We have tried to formulate a consistent approach on security, margin and other requirements.”
All those efforts, MyKYCBank initiative, White Paper initiative and coordinating attempt to understand well from both sides, Bank & Fraternity! Now, let’s attend the Summit 2022!