GJEPC organizes 4th Banking Summit 2019: Redefining the business strategy!
GJEPC has proposed introduction of a new credit guarantee insurance scheme for gem & jewellery MSMEs
The Gem and Jewellery Export Promotion Council (GJEPC) organised the 4th edition of Banking Summit 2019 in Mumbai, the business capital of India. The Summit aimed at meaningful deliberations on issues related to Gem & Jewellery industry contextually; efforts were also made to understand the factors creating present growth inertia, and define roadmap in emerging ecosystem for higher growth, exports and employment generation.
The inaugural session had prominent speakers such as Smt. Rupa Dutta, Economic Advisor, Union Ministry of Commerce and Industry, Government of India, Mr. V G Kannan, Chief Executive, Indian Banks Association (IBA), Mr. P N Prasad, Chairman, CoC (Coordination Committee) and Dy. MD, State Bank of India, Mr. Pramod Kumar Agrawal (Chairman, GJEPC), Mr. Colin Shah, Vice Chairman, GJEPC, Mr. Sanju Kothari (Convener, BITC, GJEPC), and Panelists included Mr. Nimesh Patel (CFO, De Beers), Mr. EvgenyAgureev (Director, Alrosa), Mr. BijayanandaPattanayak (Executive VP-Indus Ind Bank) and Mr. Suman Chowdhury (President-Ratings, Acuite Ratings & Research Ltd.).
Commenting at the event, Mr Pramod Kumar Agrawal, Chairman-GJEPC said, “India ranks fifth in the global gem & jewellery trade of USD 625 bn and our country has the potential to increase its exports to USD 75 billion from its USD 40 billion exports-which would increase its share of world exports by 15% to become the largest exporter globally.
To achieve this goal, GJEPC has taken several initiatives in the recent past to promote growth, increase transparency and enhance compliance culture in the sector. The release of White Paper on the sector resulted in the formation of Coordination Committee (CoC) by the Union Ministry of Commerce & Industry. Council has also constituted MyKYC Bank, Valuation Panel & Trade Disciplinary Committee to supplement the efforts of CoC.”
Mr. Colin Shah, Vice Chairman-GJEPC Said, “The US market at the retail level is looking very positive for the growth of gem and jewellery, US-China trade stand-off could also bring positive results for the exports from India besides possible investment opportunities.
India is one of the major players in jewellery market globally, and riding on native advantages, the industry should aspire to be the number one manufacturer and exporter of value added jewellery in the world. To achieve our goal, we require raw materials like Gold, Silver, diamonds both rough and polished easily available to the manufacturers.
So, it is important that banks provide finance for the raw materials to supply the gold and silver to the exporters to see the exports grow.”
Mr. Sanju Kothari Convener Banking Insurance and Taxation Committee, GJEPC, said, "The significant drop in credit facilities and shortage of working capital to exporters is impacting growth. It is unfortunate that the industry is facing credit crunch at a time when we need to accelerate to meet our export target of USD 75 bn by 2025.
Our business has typical working cycle of 8-9 months and has implications of currency movement. Thus favorable EXIM policy, Trade Policy, availability of timely credit and efficient inventory and receivable management play the key role amongst others to sustain profitability."
Government is working on introduction of a new credit guarantee insurance scheme for MSMEs, which includes G&J sector also. GJEPC is promoting financial literacy through awareness building seminars covering areas like Banking, Insurance and Taxation.
GJEPC, with support from the Union Ministry of Commerce & Industry, recommended Rs. 125 crore as a threshold credit limit for determining a unit as an MSME and providing WTP cover for such units. With the efforts of the Co-ordination Committee (CoC), State Bank of India introduced a revised credit policy for the gems & jewellery sector with provision for waiver, of INPC/ INPS cover, subject to borrowers providing additional security of 10%. It is desirable that the salient features of revised credit policy may be implemented by other lenders as well.
Besides Credit flow to sector other issues that are affecting are Cost of credit, collateral security, gold card scheme, dollarization of limits, Compliance etc; Introduction of the MyKYCBank to address identity and compliance risk has been one of the major initiative of GJEPC in recent past.
Other issues that have been streamlined include, recommending names of panel Valuers to Customs which address complexity and accuracy in stock valuation. Non-availability of adequate insurance cover, increased cost of premium on INPS is also matter of concern.
Stakeholders such as Trade, Banks, Government and Government Bodies play a vital role in redefining the business strategy. Banks has set up a long-term credit risk investigation team to track, monitor and provide intelligence information about trade members. They will take informed credit decisions and be a part of the MyKYCBank. Banks will assess credit limits in dollar terms to insulate exporters from exchange fluctuations in line with the RBI circular.
Banks will share critical information about defaulting members periodically with GJEPC so that necessary actions can be taken. Banks will provide gold card benefits to eligible entities. They will promote ease of doing business and reduction of compliance. They will also provide precious metal loans including gold loans on smaller quantities for benefit of the MSMEs.
As per RBI circular RBI/2013-14/ 291 dated September 25, 2013, RBI Master Circular 2015 and subsequent IBA circular no. 2217 dated March 3, 2016; banks have to reallocate limits towards export credit in foreign currency, which still remains to be implemented at operational level.
As per the RBI and IBA circular, all banks are requested to access credit limits in foreign currency to insulate an exporter from currency fluctuation. With efforts of the CoC, State Bank of India has implemented, 10% ad-hoc limit, over the regular working capital limit to partly address this issue.
The gem & jewellery trade has to register with MyKYCBank and approach lenders/ GJEPC on a timely basis to mitigate liquidity/ credit risk. MyKYCBank has 3,300+ registered profiles and the industry bodies enrolled with MyKYCBank are GJEPC, Bharat Diamond Bourse (BDB), Dubai Diamond Exchange, UAE (DMCC) and Antwerp World Diamond Centre, Belgium.
The trade has to ensure total transparency in exchange of information and business operations with bankers. The trade has to adopt stock maintaining tools for valuation of inventory and participate in seminars and share feedback. They have to accept and understand the importance of external credit rating.
GJEPC has recommended for utilization of the panel of Trade Valuers as notified by Customs for stock valuation by banks. GJEPC has also recommended for implementation of a Risk Management System of appraisal & clearance of parcels at PCCCC to be followed by Customs. Certain lenders and investors provide credit facilities through securitization of current assets by creation of an SPV and issuance of bonds. This mechanism helps in easing out liquidity.
As per RBI guidelines, nominated banks and other agencies can extend Gold (Metal) loans to jewellery manufacturers for manufacturing gold jewellery and not for resale of Gold. GJEPC has sought increase in the number of nominated agencies for supply of Gold and to provide SBLC/ BG facilities for purchase of other precious metals such as silver and platinum.
The topic, State of the industry, had panel of experts talking about the current status of the Industry, financial challenges the industry is going through. The experts included Mr Nimesh Patel, CFO, De Beers, Mr Dilip Shah, Co-convener, BITC, GJEPC, Mr Manish Jivani, Convener, MSME, GJEPC, Mr Sabyasachi Ray, ED, GJEPC, Mr Ghanshyam Dholakia and Mr Ajesh Mehta both members of the trade.
Propelling exports for Innovations, had experts like Mr P N Prasad, DMD, SBI (Chairman CoC), Mr Bijayananda Pattanayak, Executive Vice President, IndusInd Bank; Mr. Sanju Kothari, Convener, BIC, GJEPC; Mr Russell Mehta, Advisor to Chairman, GJEPC and Mr. Evgeny Agureev, Director, Alrosa.
The discussion on, Repositioning Business & Compliance, had speakers like Ms Rupa Dutta, Economic Advisor, Ministry of Commerce and Industry, Dr Suresh Surana, Partner, RSM Astute Consulting Pvt Ltd and Mr Suman Chowdhury, President, Ratings, Acuite Ratings and Research Limited, Mr. Colin Shah, Vice Chairman, GJEPC, and Mr. V G Kannan, Chief Executive, IBA.
The event further hosted speech by spiritual guru and motivational speaker Gaur Gopal Das. Musical performances by musical maestro by Padma Vibhushan Pt. Shivkumar Sharma and Rahul Sharma mesmerized the audience.
