1. The Value Proposition: Diamonds vs. Gold Gold as Collateral: For many lenders in India, particularly large banks and NBFCs, a 'jewelry loan' is, in practice, a gold loan. The value of the loan is almost exclusively determined by the weight and purity of the gold in the ornament. The value of any embedded diamonds or other precious stones is often not considered or is given very little weight in the valuation. Diamonds as Collateral: A genuine 'loan against diamonds' is a different product. These loans are typically offered by specialized lenders, including certain jewelers, private lenders, or financial institutions with a specific focus on high-value luxury assets. These lenders have the expertise to accurately appraise the value of the diamond itself, considering the '4 Cs' (Carat, Cut, Clarity, and Color), and other factors like the diamond's certification (e.g., GIA, EGL) and market demand. 2. Key Differences in the Loan Process Valuation: The core of a diamond loan is the expert valuation. Lenders who offer this service employ certified gemologists to perform a detailed appraisal. This process is more complex than a standard gold loan valuation, which primarily involves weighing the gold and checking its purity. Lenders: You're less likely to find a specific 'loan against diamonds' product at your local public sector bank. Instead, you'll need to seek out specialized financial companies, high-end jewelers who also provide financing, or private lenders who cater to a luxury clientele. Loan-to-Value (LTV) Ratio: The LTV for a diamond loan can be different from a gold loan. While a gold loan LTV is typically capped at around 75% by RBI regulations, the LTV for a diamond loan can vary based on the lender's policies and the specific asset's marketability. Repayment and Tenure: Like gold loans, diamond loans are usually short-term, with flexible repayment options and terms. However, given the high value of the collateral, some lenders may be open to discussing longer tenures or more customized repayment schedules. 3. Updates and Trends to Watch Rise of Specialized Lenders: With the growing wealth and luxury market, more specialized lenders are entering the space. These companies are positioning themselves as experts in appraising and lending against high-value assets, including not just diamonds but also luxury watches and fine art. Increased Demand for Confidentiality: The clientele for diamond loans often values discretion. Lenders in this space are increasingly emphasizing the confidential and private nature of their services, distinguishing themselves from more public-facing gold loan providers. Technology in Valuation: While a physical appraisal by a gemologist remains crucial, some lenders are using technology to streamline parts of the process. This might involve digital tools for initial assessment or secure online platforms for managing the loan. Market Fluctuations: The value of diamonds, like other commodities, can be subject to market fluctuations. A reputable lender will have a thorough understanding of current market trends and will base their valuation on the most up-to-date pricing. It's always a good idea for a borrower to get their own independent appraisal for comparison. 4. What to Look for in a Lender When considering a loan against diamond jewelry, it is crucial to choose a reputable lender with a proven track record. Look for a company that: Has Certified Gemologists: This is non-negotiable. The accuracy of your loan amount depends entirely on the expertise of the appraiser. Is Transparent About the Process: The lender should clearly explain how they determine the value, what fees are involved, and what the repayment terms are. Offers Secure Storage: Your valuable assets must be stored in a highly secure, insured facility for the duration of the loan. Is Flexible and Customer-Focused: A good lender will work with you to create a repayment plan that fits your financial situation.