The Punjab National Bank scam is expected to take the shine off India’s gems and jewelry business. The Mehul Choksi and Nirav Modi groups – both accused of defrauding the state-owned bank – were prominent jewelry retailers and closure of their businesses has far-reaching implications for the sector.

The absence of these two companies is expected to reduce industry turnover by 16% and cut the diamond and jewelry trade by 5-6%. Worse still, defaults (non-performing assets) in this segment are tipped to rise to 30%, the Times of India has reported.

The daily also tipped significant job losses.

The two companies — Gitanjali and Nirav Modi — employed 648 and 2,200 employees respectively, according to filings in March 2017. A combined 3,000 people would be left unemployed, with another 7,000-8,000 temporary workers and employees at franchisees expected to be affected, it added.

Firestar Diamond files for bankruptcy

Meanwhile, Firestar Diamond Inc – also owned by Nirav Modi – has filed for bankruptcy in the US, blaming liquidity and supply chain challenges. The firm listed up to $100 million in assets and debt at a bankruptcy court in New York.

And in related news, Indian enforcement agencies have entrusted Punjab National Bank with the safekeeping of precious stones seized during raids on premises and showrooms of Nirav, the missing jeweller.

State-run MMTC will assess their value and may later auction the precious stones, the Economic Times has reported. A substantial amount of gems, allegedly worth hundreds of millions of dollars, has been seized.