Loans against jewellery

Realizing that most indian citizens are investing their money in gold and other jewellery, an increasingly large number of organizations including jewellers and banks, are offering loans against gold and other jewellery. These gold loans are advertised extensively. However the organization should have sophisticated and accurate methods to evaluate the purity of the gold, as the value of the jewellery will differ considerably in case of gold of lower purity compared to 22K gold. If the jewellery value is not assessed accurately, the lender of the gold loan could make a loss, in case of a gold loan default. There are relatively less organizations who will offer loans against precious stones.