Gold Loan Per Gram Rate Today: 75% LTV Calculation, Purity & RBI Guidelines
Planning to pledge jewelry for an emergency loan? Understand how banks calculate the gold loan per gram rate, the 75% RBI Loan-to-Value cap, deductions for stones, and repayment types.
- The Reserve Bank of India mandates a strict maximum Loan-to-Value (LTV) ratio of 75% for all gold loans sanctioned by banks and NBFCs.
- Banks calculate per gram rates based on the average closing price of 22-karat gold over the preceding 30 days published by the India Bullion and Jewellers Association (IBJA).
- Stones, beads, pearls, and enamel wax (lac) embedded in jewelry are completely deducted; banks only lend against the net weight of pure gold.
- Bullet repayment schemes allow you to pay both principal and interest together at the end of the 12-month tenure without monthly EMIs.
When unexpected financial emergencies strike—a medical hospitalization, seasonal business restocking, or educational fee deadlines—gold jewelry is India's most trusted lifeline. An estimated 25,000 tonnes of gold sits in Indian households, far exceeding the gold reserves of the world's top central banks.
Yet, when borrowers walk into an SBI, Canara Bank, or Muthoot Finance branch with 50 grams of jewelry, they are surprised when the loan amount is significantly lower than the daily market price of gold shown on the news. Here is how the exact per-gram math operates behind the counter.
1. The RBI 75% Loan-to-Value (LTV) Rule
To shield both borrowers and financial institutions from volatile market crashes, the Reserve Bank of India limits the maximum Loan-to-Value (LTV) to 75%.
Furthermore, banks cannot arbitrarily pick today's peak gold price. Under RBI guidelines, lenders must calculate value based on the average closing price of 22-karat gold for the preceding 30 days, as reported by the India Bullion and Jewellers Association (IBJA).
| Gold Market Benchmark (22K) | Maximum 75% LTV Cap | Conservative Bank Disbursement Range |
|---|---|---|
| ₹6,500 / gram | ₹4,875 / gram | ₹4,500 – ₹4,750 / gram |
| ₹7,000 / gram | ₹5,250 / gram | ₹4,900 – ₹5,150 / gram |
| ₹7,500 / gram | ₹5,625 / gram | ₹5,250 – ₹5,500 / gram |
2. How Appraisers Calculate Net Weight
If you bring a necklace weighing 35 grams gross, the bank will not finance 35 grams. The certified appraiser conducts three deductions:
- Precious Stones & Kundan: Diamonds, cubic zirconia, rubies, and pearls have zero loan value. Their weight is deducted 100%.
- Lac / Wax Filling: Traditional heavy jewelry often has hollow tubes filled with wax (lac) to give structural rigidity. Appraisers melt or estimate this filling and deduct it.
- Purity Scaling: If your jewelry is 18-karat (75% pure gold) rather than 22-karat (91.6% pure gold), the valuation is proportionally downscaled by 18/22.
3. Repayment Modes: EMI vs Bullet Repayment
- Regular Monthly EMI: You repay principal + interest every month, similar to a personal loan. Ideal if you have a stable salary.
- Overdraft (OD) Facility: A credit limit is assigned against your gold. You only pay interest on the exact amount you withdraw, for the exact number of days you use it.
- Bullet Repayment Scheme: No monthly installments! You pay the entire principal amount plus accumulated interest in one single lump-sum check at the end of the 12-month tenure.
Frequently Asked Questions
What is the maximum LTV ratio allowed by RBI for a gold loan?
RBI caps the Loan-to-Value (LTV) ratio at 75%. This means if your pledged gold has an appraised market value of ₹1,00,000, the maximum loan amount a bank can disburse is ₹75,000.
How do banks test the purity of pledged gold jewelry?
Banks employ certified government-approved gold appraisers who use touchstone nitric acid testing, specific gravity testing, or non-destructive XRF (X-ray fluorescence) spectrometer machines to verify purity between 18K and 22K.