Gold loans have become one of the fastest-growing financial products in India. With minimal documentation, quick approvals, and flexible repayment options, they’re a go-to choice for emergency funding. But the big question is—how much loan can you actually get against your gold? The answer lies in understanding the Loan-to-Value (LTV) ratio.
What is LTV in Gold Loans?
The Loan-to-Value (LTV) ratio determines the maximum amount a lender can give you against the pledged gold. It’s expressed as a percentage of the gold’s current market value.
👉 For example, if your gold is worth ₹1,00,000 and the LTV ratio is 75%, you can get a maximum loan of ₹75,000.
RBI Guidelines on LTV for Gold Loans
Maximum LTV: As per RBI, lenders can provide up to 75% of the gold’s value.
Type of Gold: Only hallmarked gold jewelry/ornaments are accepted (no coins beyond 50 grams).
Valuation Method: Banks and NBFCs determine loan eligibility using prevailing gold prices (often average rates over the past 30 days)
Factors Affecting Gold Loan Amount
Gold Purity (Carat): Higher purity (22K and above) fetches better valuation.
Market Gold Price: Loan eligibility rises with increasing gold prices.
Lender Policy: Some lenders may offer slightly lower LTV to reduce risk.
Type of Loan: Overdraft vs. term loan—limits may vary.
Example: Loan Eligibility Based on Gold Value
| Gold Value (₹) | LTV (75%) | Loan Amount (₹) |
|---|---|---|
| 50,000 | 37,500 | 37,500 |
| 1,00,000 | 75,000 | 75,000 |
| 2,00,000 | 1,50,000 | 1,50,000 |
Benefits of Gold Loans
Quick disbursal—often within hours.
No credit score required.
Flexible repayment (bullet, EMI, overdraft).
Lower interest rates compared to personal loans.
FAQs
Q1: What is the current maximum LTV allowed by RBI?
75% of the gold’s market value.
Q2: Can I get 100% loan against my gold?
No. RBI restricts lenders to a maximum of 75%.
Q3: Does gold purity affect loan eligibility?
Yes, 22K or higher purity gold gives you better value.
Q4: Are gold coins accepted for loans?
Yes, but only up to 50 grams per borrower and issued by banks.
Q5: What happens if gold prices fall after I take a loan?
The lender may ask for additional security or partial repayment to maintain the LTV ratio.
Published on : 2nd September
Published by : SMITA
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