Fallout from alleged diamond-debt fraud continues

Indian central bank to tighten the regulations and ramp up scrutiny over large, dodgy loans handed out by state banks; Indian businesses run on lax credit to also feel the squeeze

Published Wed, Feb 21, 2018 · 09:50 PM

London

THE alleged diamond debt fraud in India has severe implications for the global gem and banking businesses.

"We are worried about the ripple effects," a spokesman for the Antwerp World Diamond Centre said.

The main implication is that the Reserve Bank of India (RBI) now intends to raise the regulatory bar. A new committee will henceforth monitor large dodgy loans with suspect and overvalued asset collateral; it will also use IT and demand tighter bank auditing standards.

This more intensive oversight will affect not only the banks that have provided loans to Indian diamond dealers and manufacturers, but other businesses as well.

The scandal is centred on billionaire jeweller-to-the-stars Nirav Modi, who is being investigated for his alleged involvement in a US$1.8 billion loan fraud at the Punjab National Bank (PNB), India's second largest state bank. The Indian federal police have alleged that he and others conspired with several PNB employees …

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