On a wintry morning in 2018, one of India’s largest high-street lenders, Punjab National Bank (PNB), had woken up to the horrors of huge losses inflicted by diamantaires Nirav Modi and his uncle Mehul Choksi. The scam drove most banks to clamp down on loans to diamond houses, with every lender slashing credit limits and turning overtly selective on borrowers.
Five years later, PNB, which suffered the most at the hands of the country’s most infamous jewellers, has now made a quiet comeback with a new internal policy to bankroll diamond houses which make lab-grown or synthetic diamonds.
Under the new policy that was finalised a few weeks ago, the public-sector bank would give working capital as well as term loans to manufacturers of lab-grown stones against 100% collateral security and high internal rating of the borrower, said a person familiar with the bank’s internal circular.
