As per an article in Economic Times, one of the country's largest jewelers, Gitanjali Gems, has been badly hit by the Reserve Bank of India's new rules on gold import. Earlier, Banks financing Gitanjali's gold imports were extending letter of credit (LC) facilities, which in banking parlance is non-fund finance. Recently, RBI directed banks to collect payment upfront from gold importers opening LCs with them. The company is therefore in discussion with banks to convert the non-fund credit limits into working capital loans.
Additionally, the company has also sought a loan of Rs 1,000 crore as its import bill shot up on account of fall in the rupee against dollar. Lenders said that the loan was sanctioned when exchange rate was pegged in the range of 52 and 53 against the dollar and it is now traded between 67 and 68. Bankers are said to be willing to extend the loan provided the promoter is able to bring additional collateral.
Lenders already have a loan exposure of Rs 4,500 crore to Gitanjali Group and about Rs 3,000 crore to Gitanjali Gems, the flagship company which owns brands such as Nakshatra, Gili, Sangini and Asmi among others. . The company's shares had touched a high of Rs 649 on April 23 fell to a low of Rs 52 by mid August.