Mumbai: In the wake of diamantaires Nirav Modi and Mehul Choksi allegedly defrauding Punjab National Bank of Rs 11,400 crore, the diamond industry will be approaching the finance ministry seeking a robust banking structure to finance the industry.
Revoking their self-imposed ban on speaking to the media over the massive fraud, some of the industry leaders spoke to CNN-News18 and said that the development is “very disturbing and shocking”.
“This is not good for the industry. Everyone has become doubtful of us despite us being global leaders in the business. It has affected our businesses and we fear financial institutions will now make our lives difficult,” Praveen Pandya, ex-Chairman of Gem Jewellery Export Promotion Council (GJEPC) said.
“We employ over 1.2 million people and have exports worth $23 billion. There are six thousand exporters who run from pillar to post to get finances of Rs 10-50 crore. How did these two people get such huge loans without any collateral?” asked Pandya.
Several industry leaders have raised questions on the auditing systems of the banks and alleged connivance.
Arun Mehta, Chairman of Rosy Blue, one of the largest diamond manufacturers in the world, added, “The massive fraud has severely affected our business and everyone is doubtful of us right now. We are still trying to understand what we can do to reduce the damages and give confidence to our stakeholders.”
Pandya on the other hand came down heavily on the banking system that could not detect the fraud that continued for seven years.
“Nobody could find out for 7 years that loans were being given out without any collaterals to Nirav Modi and Mehul Choksi? Where is the audit system and what about internal control?” he asked.
“This scam has nothing to do with the diamond industry. This is about public money. PNB has to have its system in place.”
Pandya added that the industry leaders would now write to the Finance Ministry seeking a robust banking system for diamond trade in order to prevent such frauds in the future.
“Traders and diamantaires are in shock. Why are the banks lending out such huge amounts without any scrutiny? Bankers have to be tight in their scrutinising. The diamond industry is the safest and with minimum Non-Performing Assets,” said Dilipkumar Lakhi, leading diamantaire and owner of Lakhi Diamonds.
Meanwhile, another member of the GJEPC said that the industry leaders would approach the finance ministry. “There are loopholes in the banking system and we need to work together to put an end to such frauds. We are meeting the finance minister soon,” said Kirit Bhansali of GJEPC.
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