Extension of a moratorium on the payment of interest; one-time subsidy and loan restructuring; increase in the duration of Gold Metal loans from 180 to 270 or 360 days, among others.
The entire Indian National Gem and Jewelry Council (GJC), which represents thousands of small and MSME jewelers and related business partners, wrote to the Union Minister of Finance (FM) and the Reserve Bank of India (RBI) to request immediate financial assistance and bank assistance. for stressed jewelry, jewelry and related businesses are showing the devastating second wave of the global COVID-19 pandemic. GJC indicated that the expert committee chaired by KV Kamath, constituted by RBI (7e August 2020) had included the gemstone and jewelry sector among the stressed industries in their report submitted on September 4, 2020.
As several jewelers affected by multiple lockdowns struggled to repay their loans, GJC requested an extension of the moratorium on interest payments for the stressed gemstone and jewelry industry for a period of six months. GJC urged FM and RBI to expand certain measures – Resolution Framework 2 and Resolution for MSMEs – to alleviate uncertainties and stress on the jewelry industry (which mainly includes small businesses and MSMEs). GJC urged the government to help restructure loans to gemstone and jewelry companies by offering them a one-time grant. GJC has called on the government to increase the duration of gold metal loans (GML) from 180 days to 270 (as was done in the last year of 2020) or 360 days.
GJC said the gemstone and jewelry industry is one of the most affected industry with the potential loss of unskilled and poor goldsmith jobs. The industry is burdened with huge inventory costs, higher fixed overheads including interest charges and rents, among others.
Mr. Ashish Pethe, President, GJC, said: “For nearly two months of 2021, the national gemstone and jewelry industry and their stores / shops have been closed even as key festivals such as Gudi Padwa and Akshaya Tritiya were celebrated in lockdown. -out for the second year in a row. The government has allowed weddings during closings, but jewelry businesses do not fall under the “Essential” category. Even after the slow opening of the United States, the next few months will be difficult and exciting for the industry, which provides livelihoods for hundreds of people and their families. We ask the government to consider our advocacy to offer financial aid, assistance and relief as has been given to several small businesses and MSMEs in other sectors. We also want the benefits that were granted in 2020 to be extended even into 2021. “
Mr. Saiyam Mehra, Vice-president, GJCadded: “We urge the government to allow a six-month interest moratorium for the stressed gemstone and jewelry industry; and allow six months to pay the accrued interest in equivalent monthly installments. The government has extended ECGLS 3.0 to the hospitality, travel and tourism sector, seeing financial stress in the sector due to COVID; and we are looking to extend the same facility to jewelers under CCEL 2.0. This can be done by providing credit up to 40% of the total outstanding amount and should be made available to all borrowers, who have a Rs. 500 crore limit and even if the delay is 60 days or less . We believe that it will be appropriate for financiers to restructure loans to the gemstone and jewelry sector by offering a one-time subsidy.
Speaking of Gold Metal Loan (GML), Mr. Pethe added, “The GML is currently offered for 180 days, which is expected to be extended to 270 days as offered to exporters. RBI had authorized banks to extend the validity of the GML to 270 days during the lockdown in 2020. We ask that you extend the duration / validity of the GML to 270 days this time as well. Internationally, GML is offered a mandate of 1 to 2 years. We ask you to increase the validity period of GML from 180 days to 270 or 360 days. This will benefit the government as the position of the CAD will improve with a substantial reduction in gold imports. “
GJC has requested an extension of the moratorium on interest payments for a period of six months on all working capital, term loans and other credit facilities enjoyed by the gemstone and jewelry industry, as authorized. previously in RBI notifications RBI / 2019-20 / 186 dt. 27.03.2020 and RBI / 2019-20 / 245 of 23.05.2020. GJC said the business was suffering a huge loss of profit due to huge fixed overhead costs such as bank interest, wages, rent, staff welfare, security. As the festival season approached, jewelers had improved their inventory and used their working capital to source jewelry for parties and weddings, just before the lockdown was announced. A moratorium on interest should be extended for a period of 6 months as interest on capital is the main expense in the gemstone and jewelry sector. Banks should not focus on being profitable in this time of pandemic and provide support for the stressed gemstone and jewelry industry by lowering the interest rate to the REPO / EBLR level, GJC said.
GJC stated that Empty RBI Circular no. RBI / 2021-22 / 32 dt. 05-05-2021, the existing loan facilities to MSMEs classified as “ standard ” are to be extended and can be restructured without lowering the asset classification or credit rating, subject to the following conditions: Exposure overall, including non-funds bank and NBFC based facilities to the borrower do not exceed ₹ 25 crore as of March 1, 2021. The facility is expected to be extended to borrowers, whose aggregate exposure does not exceed Rs. 100 crores.
GJC urged the government to provide a one-time subsidy of the amount of interest to jewelers, which was paid or payable for fiscal years 20-21 and 21-22. This restructuring is the need of the hour as the gemstone and jewelry industry is a capital intensive industry, so most jewelers have huge operating costs including interest. on capital. GJC said jewelers have been paying interest to banks for many years and maintaining good credit ratings in their accounts. Due to COVID-19 lockdowns 1 and 2, they are struggling to cope with the capital loss in this industry.
About GJC: All India Gem and Jewelery Domestic Council (GJC) represents over 5,00,000 players including manufacturers, wholesalers, retailers, distributors, laboratories, gemologists, designers and related services to the national gemstone and jewelry industry. The Council operates with the objective of approaching the industry, its functioning and its cause with a 360 ° approach to promote and advance its growth, while protecting the interests of the industry. GJC, for 15 years, has served as a bridge between government and commerce by undertaking various initiatives on behalf of and for the industry.