Gitanjali Gems, which has been hit by Reserve Bank's stringent rules on gold import and Rupee depreciation, has approached banks for more than Rs 1,000 crore of loans. The company is in talks with consortium of banks, led by Allahabad Bank, seeking additional funds and conversion of non-fund-based limits into fund-based loans.
Banks currently have an exposure of Rs 4,500 crore to the Gitanjali group, and two-thirds of it is to Gitanjali Gems, the flagship company that owns brands such as Nakshatra, Gili, Sangini and Asmi.
Recently, the Reserve Bank of India directed banks to collect payment upfront from gold importers opening letter of credits, a move that makes the letter of credit route singularly unattractive, as this straight away cuts off three months' credit facility that importers earlier used to enjoy.
Further, the company’s import bills also have significantly risen on account of sharp depreciation of Indian currency against dollar. The additionally loans, basically are for paring the rupee dollar parity.
