23 Carat Gold Loan Rate: How Much Loan Per Gram?

The interest rates for loans on 23 carat gold depend on many things including the benchmark price for gold, the purity of the jewellery, the determined net weight of gold and the Loan to Value Ratio (LTV). Since 23 carat gold has a purity of around 95.83%, it can be valued at a higher rate than 22-carat gold of the same net weight depending on the calculations done by the lending institution. This article will describe the valuation process for 23-carat gold for loan purposes, calculation of per gram eligibility and comparison with other gold purities. 

What Is 23 Carat Gold and How Pure Is It?

In the carat system, gold purity is assessed using a rating scale of 24 portions. Twenty-three portions of gold in 24 gives a purity rating of 95.83%, or fineness 958. For comparison:

• 24-carat gold: approximately 99.9% purity

• 23-carat gold: approximately 95.83% purity

• 22-carat gold: approximately 91.67% purity

• 18-carat gold: approximately 75% purity

Although 23-carat jewellery is less common than 22-carat jewellery in India, it may be considered for gold loans subject to purity assessment, collateral eligibility, and lender policies. Eligibility is determined through the lender's valuation process and applicable regulatory requirements. 

How to Calculate the 23 Carat Gold Loan Rate Per Gram

The valuation methodology used by regulated lenders is governed by the applicable RBI framework. The calculation generally involves three steps:

• Determine the benchmark gold price based on the prescribed valuation methodology.
• Adjust the benchmark price to reflect the purity of 23-carat gold.
• Apply the applicable loan-to-value (LTV) limit based on the sanctioned loan amount.

Using an illustrative 22-carat benchmark value of ₹14,500 per gram:

• Adjusted 23-carat value ≈ ₹15,159 per gram

• Indicative amount at 85% LTV ≈ ₹12,885 per gram

Under this illustration, 10 grams of eligible 23-carat gold may correspond to an indicative loan amount of approximately ₹1,28,850, subject to lender assessment, net gold content, valuation procedures, and applicable regulations. 

Valuation is generally based on the eligible net gold content after deductions for stones, enamel, beads, fittings, or other non-gold components. Benchmark gold prices may change periodically, resulting in corresponding changes in valuation outcomes. 

Comparing 18, 22, 23 and 24 Carat Loan Value Per Gram

Note: Please note that the above values are for illustration purposes only. The actual value, loan amount available, the LTV ratio to be considered, fees and other requirements would depend on the policy of the lender, valuation of the collateral, applicable regulations, and market factors. 

There is not much of a difference between 22 carats and 23 carats gold. While the gold being more pure may have a higher value, the amount of loan depends on the LTV ratios, collateral eligible and the weight of gold. 

Whether Lenders Accept 23 Carat Gold and What Happens at the Branch

The eligibility for gold loans is mostly dependent on the purity, value, and loan policy of the lender. Most lenders consider high purity gold jewellery like 23-carat jewelry to be eligible. 

During the valuation process, the lender may:

• Assess the gross weight of the jewellery.

• Identify and exclude non-gold components.

• Determine the net gold content.

• Conduct purity testing using approved methods.

• Calculate valuation based on applicable procedures.

A valuation certificate or assessment record may be issued in accordance with lender policies and regulatory requirements. Purity assessment outcomes may differ from assumptions based on invoices, family records, or other informal estimates. 

Interest Rates and Loan Terms for a 23 Carat Gold Loan

The purity of the pledged gold affects the valuation of the gold and the eligible amount that one can borrow from the financial institution. 

Rates of interest, fees, charges, tenures, and repayment mechanisms will differ depending on the lending institution and the specific product in question. The terms applicable will depend on the financial institutions' policies. 

The repayments could be made in instalment-based repayments or interest servicing repayments or any other type of loans approved by the lender. 

How IIFL Finance Processes Applications Secured by 23 Carat Gold

Gold loans are loan facilities secured by pledging gold jewelry that qualifies as eligible collateral.

IIFL Finance can provide gold loans based on the availability of the product, eligibility of the borrower, assessment of collateral, documentation, and other regulatory requirements. 

The application for 23-carat gold jewelry will be evaluated based on the purity of the gold, gold content, collateral eligibility, and ownership of the gold.

In compliance with relevant regulations, funds received from a gold loan can be used for various purposes as long as these are within legal limits and in accordance with the lenders' policies. 

The appraisal, storage, release, compensation, disclosure, and account management processes are all covered under relevant regulations and lender policies. 

Conclusion

The rate of 23 carat gold is based on the benchmark price of gold, purity factor, net gold content, LTV ratios applicable and valuation procedure adopted by the lending institution. Due to the high purity levels of 23 carat gold as compared to 22 carat gold, its value may be higher per gram. 

Loan amount at the end depends on the considerations like purity, net weight, eligibility of collateral to be used, regulatory and lender guidelines, among others. These are done in line with all the relevant regulations and lender requirements. 

Disclaimer : The information in this blog is for general purposes only and may change without notice. It does not constitute legal, tax, or financial advice. Readers should seek professional guidance and make decisions at their own discretion. IIFL Finance is not liable for any reliance on this content. Read more