The Indian diamond industry’s liquidity crisis – said to be the worst in 50 years – is claimed to be self made as big and medium diamond firms have diverted $5.4 billion in bank finance for diamond operations into real estate, according to a report published in The Times of India.
Some diamond firms reportedly used finance obtained from several high-street lenders to dress up past losses on their books.
With real estate prices now falling, these firms are now caught in a crunch. The situation is compounded by speculative buying of rough diamonds over the past two years. Rough diamond prices also declining.