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In today’s digital and economically advanced world, borrowing is not only a necessity but a common thing for many. From home loan to education or gold loans, banks lend to many properties. However, one question is so valuable to many, but why is it not borrowed on it? As natural as this question is, the answer is complicated.

Why not give the bank loan on diamonds?

Determining the cost of diamonds is a very technical and expert experience process. The value of the diamond is determined on the basis of four components of ‘4CS’, ie cut, clarity, color and carat. But how can this measure can be explained to a general bank employee? In addition, banks are also at risk of confusion with fake diamonds, JD or other crystals. That is why banks do not show much faith in diamonds.

In contrast, gold is considered to be a liquid asset. That is, it can be easily sold in the market and its cost is universally known. Diamonds, however, cannot be immediately and faithfully and faithfully. Therefore, it becomes a risk transaction from a practical point of view for the bank.

The third important reason is recovery. If no one can repay the loan in time, it is a way of selling the money to the bank by selling mortgaged assets. However, due to the uncertain prices of diamonds and the limited limitation of buyers, it is not possible for banks. Therefore, lending on such property means opening a financial danger door for banks.

According to the policy in banks, if the diamonds are intense in jewelry, the loan is only paid at the value of gold. Because even though diamonds may seem elegant and valuable, it is not considered a mortgage property from the bank’s point of view. Moreover, there is no transparency in the diamond market, so this is a major problem for the banking sector.

The importance of gold, land or term

Also, diamonds are often found in fraud, fake or unparalleled transactions. Some traders threaten banks by taking lease or export credit through this. Therefore, the banks of their risk increases unnecessarily.

Therefore, the diamond is valuable, but not reliable for banks. Properties like gold, land or term deposit are still considered safe from the banking system.