Frauds are proving to be a headache for gold loan companies which are grappling with the problem of borrowers pledging spurious and even stolen metal to meet their funding requirements.

With a surge in the number of institutions which offer gold loans, companies say there is an almost proportionate increasein the probability of a fraud as a greater number of people are now aware of gold loans. Earlier if there was one case of fraud in the 30,000, today it is one in every 10,000 cases.

Unfortunately spurious and low purity gold is being detected not only with financial institutions, but the market in general.