Gold Loan Pricing: The Influence of Per Gram Rates

Your gold loan amount depends almost entirely on one number: the rate per gram your lender offers. A gold loan per gram is calculated by multiplying the current market price of 24K gold by the purity ratio of your jewellery, then applying the lender's loan-to-value (LTV) ratio, which the RBI caps at 75%. For 22K gold priced at ₹7,000/gram (24K rate), the maximum loan per gram works out to approximately ₹4,813. Rates change daily with gold prices, so the figure you see today may differ tomorrow.

This guide breaks down exactly how that number is arrived at, what moves it up or down, and how to estimate your own eligible amount before you walk into a branch.

Since gold loan rates per gram change daily with the market, the easiest way to understand them is to see how different purities compare to the same base price.

Assume a 24K gold price of ₹7,000 per gram and a standard 75% LTV:

The formula behind every row is the same: Market Price (24K) × Purity Factor × 75% LTV = Loan Per Gram.

A few things worth keeping in mind:

• These figures are indicative. Gold prices update daily, and your final loan amount depends on the rate at the time of application plus the lender's in-branch assessment of your jewellery.
• 22K is the most commonly pledged purity in India, since most gold jewellery is made at this standard, making it the practical benchmark for most borrowers.
• The 75% number is the maximum allowed by law, not a promise. Depending on the plan you choose, some lenders may use a lower LTV.

For a number specific to your gold, use the Aditya Birla Capital gold loan calculator rather than relying on a generic table — it factors in the day's live rate and your exact weight and purity.

The calculation runs through four steps, and each one has a direct bearing on the final figure you're offered.

Step 1: Start with the 24K market price.

Lenders anchor every calculation to the current price of pure (24K) gold per gram, typically benchmarked against MCX or IBJA rates for that day.

Step 2: Adjust for purity.

Jewellery is rarely 24K. Multiply the 24K price by a purity factor, which is the gold's karat divided by 24. This will tell you how much your gold is worth. For 22K gold, that's 22 ÷ 24 = 0.9167.

Step 3: Apply the LTV ratio.

The Reserve Bank of India sets a maximum LTV of 75% for gold loans from banks and NBFCs. Multiply the purity-adjusted gold value by this ratio (or by whatever lower LTV your specific scheme offers) to arrive at your maximum loan amount.

Step 4: Arrive at the loan per gram.

The result of steps 1–3 is your maximum eligible loan, expressed per gram of gold pledged.

Worked example: Say the 24K gold price today is ₹7,000 per gram, and you're pledging 22K gold.

• Purity-adjusted value: ₹7,000 × 0.9167 = ₹6,417 per gram
• Apply 75% LTV: ₹6,417 × 0.75 = ₹4,813 per gram

So for every gram of 22K gold pledged, you could be eligible for roughly ₹4,813, before processing fees.

Some lenders set their LTV lower, like 65–70% for some repayment plans. This would make this number lower as well.

Rather than running this maths manually each time, the gold loan calculator applies the day's rate automatically and gives you an instant estimate.

Lenders only care about how much pure gold is in your jewelry, not how heavy it is all together. It doesn't count stones, gems, enamel work, or other metals that are mixed in with the gold because they don't have any gold loan value on their own.

Here's how the common purity grades convert:

Most household jewellery in India is 22K, which is why it's used as the standard reference point in most rate tables, including the one above. To confirm purity, lenders typically test your gold in-branch using methods such as fire assay or XRF (X-ray fluorescence) testing, rather than taking the hallmark at face value alone.

The Reserve Bank of India mandates a maximum loan-to-value ratio of 75% on gold loan extended by banks and NBFCs. In simple terms, a lender can offer you at most ₹75 for every ₹100 worth of gold you pledge, based on its assessed market value.

This cap exists to protect both sides of the transaction. For the lender, it builds in a buffer against gold price volatility. But it works in your favour too: by keeping the loan amount below the full market value of your gold, the cap reduces the chance that a dip in gold prices pushes your outstanding loan above the value of your collateral, which is what triggers margin calls or demands for additional security.

Some lenders offer LTV levels below the RBI ceiling, usually between 60 and 70%. It depends on the type of loan, the length of the loan, and the way you choose to pay it back. It's worth checking the applicable LTV before comparing offers, since a lower LTV directly reduces your loan per gram.

Four variables drive the rate you're offered on any given day:

1. Daily gold market price

Gold loan rates track MCX or IBJA benchmark prices, which change daily. A rise in the market price increases your eligible loan per gram; a fall reduces it.

2. Gold purity

Higher karat gold carries a higher purity factor, which directly increases the per-gram loan value. This is why 24K gold yields more than 18K gold at the same market price.

3. Lender's LTV policy

LTV ratios vary between 60% and 75% depending on the lender and the specific scheme. A higher LTV means a larger loan for the same gold.

4. Loan tenure and repayment type

Some lenders offer a higher LTV for shorter tenures or for bullet repayment schemes, where the principal and interest are paid at the end of the term rather than through instalments.

Together, these four factors explain why two borrowers pledging the same weight of gold on the same day can walk away with different loan amounts.

A calculator removes the manual math and gives you an instant, rate-adjusted estimate. Here's how it works:

1. Enter the weight of your gold, in grams.
2. Select the purity: 18K, 20K, 22K, or 24K.
3. The calculator applies the day's market price along with the applicable LTV ratio.
4. View your indicative loan amount, calculated instantly.

This is just a rough estimate; the exact amount that will be paid for your gold will not be known until it is weighed and examined in person at the branch. Still, it's a good place to start when making a budget before you apply.

Calculate Now by using the Aditya Birla Capital gold loan calculator, also available on the ABCD app, to get a personalised estimate based on today's rates.

Before applying, it helps to know the basic eligibility framework lenders work with:

• Age: Most lenders require applicants to be between 18 and 70 years old.
• Gold purity: A minimum of 18K is typically required for the gold to be accepted as collateral.
• Accepted gold types: Jewellery and gold coins (up to 50 grams) sold by the bank itself are generally accepted. Privately purchased gold bars are usually not accepted by banks, though policies can differ at NBFCs.
• Documentation: Identity proof (Aadhaar, PAN, passport, or voter ID) and address proof are required.

One advantage of gold loans is accessibility: most lenders do not require income proof or a credit score check, since the loan is fully secured against your gold. This makes it one of the faster borrowing options available when you need funds quickly.

Check Your Eligibility and apply directly through Aditya Birla Capital.