Mumbai: Severe liquidity problems are forcing some Indian diamond companies to offer large discounts to off-load inventory in order to pay off loans, according to Indian media reports.

The liquidity issues have been sharpened further by the winding down of the Antwerp Diamond Bank (ADB), and recent reports that Standard Chartered Bank is cutting back its exposure to the diamond trade and plans to demand outstanding loans to be paid off in the coming months.

Ahead of the Diwali holiday season starting on October 20, Indian diamantaires have recently been offering discounts ranging from 3 to 20 percent, according to reports in The Hindu and The Times Of India.

The size of the Indian diamond jewelry market is estimated at $8 billion per annum, with the main buying season in India being the marriage season and the Diwali festival when Indian consumers buy diamonds worth $2 billion, The Times of India reported.

Vipul Shah, Chairman of the Gem & Jewellery Export Promotion Council (GJEPC) told The Hindu newspaper the situation was “very challenging” for the domestic industry and would face a big hit by the closure of ADB and a resulting liquidity crunch.

Small and medium diamantaires were particularly dependent on ADB and Standard Chartered Bank for loans and needed to clear inventory ahead of the loan recovery process.