IBJA recommends jewellery manufacturers only sell with PDCs
today Nov 14, 2019
The India Bullion and Jewellers Association agreed on selling fine jewellery and ornaments with post-dated cheques henceforth following recent high-profile failure of several jewellery credit schemes.
The IBJA decided at its meeting on November 11 that selling finished jewellery items with PDCs would increase security in the jewellery industry. Where traditionally jewellery manufacturers would give jewellery retailers open credit, the IBJA has advised that businesses switch to PDCs to protect manufacturers should retailers fail. The decision could set a pan-India precedent.
“Many jewellers across the country have inventory that is on credit [from jewellery makers]; the stores themselves are on lease and they run jewellery investment schemes wherein money is raised from the public, who buy ornaments by paying monthly instalments for up to 11 months,” the IBJA’s national secretary, Surendra Mehta, said in a statement, reported by ET Bureau. “Given the recent failure of such schemes run by some Mumbai-based jewellers, there is a probability that such schemes would come under the government’s glare, in which case creditors of these jewellers could be at risk.”
Jewellery businesses Goodwin Jewellers and Rasiklal Sankalchand recently left investors in the lurch when their credit schemes failed. Goodwin Jewellers shut its retail outlets with no warning later told investors that it may take years for their money to be returned due to an ongoing police investigation into the business.
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