New York lender to pump $1.5bn loan into diamond industry
There is some good news for the cash-strapped diamond industry in Surat and Mumbai. The midstream diamond and jewellery manufacturers are set to gain access to more than a billion dollars in loans from a New York-based lender. The Excelsior Capital Ventures, founded by an Indian will start engaging with borrowers to pump in at least $1.5 billion by 2019. Two months ago, the Standard Chartered exited from diamond financing. The bank, with its reported $2 billion worth of portfolio, a majority in India and Antwerp, was reportedly caught up in the default of Winsome Diamonds and Jewellery worth Rs 6,500 crore, considered one of the biggest defaults in Indian history. Earlier in 2014, Antwerp Diamond Bank (ADB) closed its diamond financing business, followed by Royal Bank of Scotland (RBS) and ABN Amro banks scaling back its loan in the last two years and other lenders insisting on extra collateral. Industry experts said that the exit of Standard Chartered banks and other leading banks had put pressure on industry financing. Facing heat, the Indian banks have started putting a heavy pressure on the diamond companies. Besides collateral and rough diamond stock, lenders ask for fixed assets, cash margin and claim on receivables for extending credit facilities. Total exposure by Indian banks to the diamond trade is between $6 billion and $7 billion with interest charged at nearly 13%. India's annual rough diamond imports is pegged at $ 16 billion.