India's gem and jewellery industry is pressing for more time to settle letters of credit (L/Cs).

The industry, which has been hard hit by the global economic downturn, cites a lack of credit as one problem it has with the banking sector. It has also expressed concerns over interest rate subvention and a lack of support from banks at branch level.

L/C extension

The Indian Banks' Association (IBA) has held discussions with the industry and received feedback from its representatives one senior executive with a large public sector bank has said.

The credit crunch and delayed payments from customers has left gem and jewellery suppliers finding it difficult to repay loans.

This is why jewellery manufacturers have sought an extension in the time limit for L/Cs allowed for gold imports.

Case-by-case

Bankers have reportedly said different L/C terms for jewellery manufacturers would be considered, but banks would look at extending payment terms on a case-by-case basis.

Rating's agency Fitch says the industry has to contend with long collection periods of 120-180 days.

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