Gitanjali Gems approaches banks for additional funding

Leading gem and jewellery entity Gitanjali Gems has approached banks for additional funding to sustain the effects of changes in government policies on gold imports and the Rupee decline, reports say. The corporate is seeing banks to lend over Rs 1,000 crore, and to convert non-fund based limits into fund-based loans, reports say. Lenders have a loan exposure of Rs 4,500 crore to Gitanjali Group and about Rs 3,000 crore to Gitanjali Gems, reports suggest.

So far the banks which lent towards the company’s gold imports did so with extending letter of credit (LC) facilities (non-fund finance). But after the central banks restrictions, gold import against LC has become very difficult, close to impossible. As such, the company is asking for the conversion from non-fund credit limits into fund-based loans, reports say.

With the fall in the Indian Rupee, the company is also seeking loans to fund its import payments, reports add.