75% LTV Gold Loan: Rules That Apply When a Loan Exceeds Rs. 5 Lakh
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A 75 percent LTV gold loan cap applies to any gold loan above Rs. 5 lakh under the RBI's tiered Loan-to-Value framework. In practice, the maximum loan is 75% of the gold's assessed value. Smaller loans qualify for higher tiers. This guide sets out the three-tier structure, a worked INR calculation, and what happens if LTV is breached.
What Is LTV in a Gold Loan?
Loan-to-Value, or LTV, is the share of a pledged item's assessed market value that a lender will release as a loan. For gold, it sets the ceiling on how much can be borrowed against the ornaments offered as security.
The calculation is straightforward:
Loan Amount ÷ Assessed Gold Value × 100 = LTV%
So if gold is assessed at Rs. 4 lakh and the loan sanctioned is Rs. 3 lakh, the loan to value gold loan figure works out to 75%. The higher the LTV, the more a borrower receives against the same gold — which is exactly why the regulator caps it.
The Three-Tier LTV Structure: Where 75% Fits
The tiered LTV gold loan structure replaced the earlier flat 75% ceiling. Under the RBI (Lending Against Gold and Silver Collateral) Directions, 2025, the tiered caps are 85% for loans up to ₹2.5 lakh, 80% for loans above ₹2.5 lakh and up to ₹5 lakh, and 75% for loans above ₹5 lakh. These Directions became fully effective on 1 April 2026, with loans sanctioned before that date remaining under the earlier framework. IndiaLaw LLPIndiaLaw LLP
|
Loan Amount Band |
Maximum LTV |
Key Note |
|
Up to ₹2.5 lakh |
85% |
Highest tier- small-ticket borrowers |
|
Above ₹2.5 lakh – ₹5 lakh |
80% |
Mid tier |
|
Above ₹5 lakh |
75% |
This article's focus- most conservative tier |
Note: All figures are indicative. Actual amounts, fees, coverage percentages, and eligibility criteria may vary depending on the lender, borrower profile, loan category, and applicable guidelines at the time of application.
The 75% band is the most conservative of the three and applies to the largest loan amounts. It is a maximum, not a minimum, a lender may apply a lower LTV at its discretion, but cannot exceed 75% for a high value gold loan LTV above Rs. 5 lakh.
How to Calculate the Eligible Loan Amount at 75% LTV
Working out a gold loan calculation above 5 lakh takes four steps. The gold price used below is illustrative only, the actual rate changes daily and is set by the lender's valuation method.
The Formula
Net weight × purity-adjusted price per gram = assessed value; then assessed value × 75% = maximum loan
Step-by-Step Example (Loan Above Rs. 5 Lakh)
- Gold weight and purity: A borrower pledges 100 grams of 22-karat gold. 22K is approximately 91.6% pure.
- Assessed value: Taking an illustrative purity-adjusted rate of around Rs. 7,280 per gram, the assessed value is roughly 100 × 7,280 = Rs. 7.28 lakh.
- Apply 75% LTV: 75% of Rs. 7.28 lakh ≈ Rs. 5.46 lakh.
- Maximum loan: The borrower may receive up to approximately Rs. 5.46 lakh, subject to lender valuation.
A useful crossover point: at 75% LTV, gold assessed at exactly Rs. 6.67 lakh yields a maximum loan of Rs. 5 lakh (6.67 × 0.75 ≈ 5.00). Below that assessed value, the resulting loan may fall under Rs. 5 lakh, in which case the 80% or 85% tier could apply instead — potentially increasing the eligible amount on the same gold.
What Happens If LTV Rises Above 75% During the Loan Tenure?
The LTV cap is not a one-time check at disbursement. The prescribed LTV must be maintained throughout the tenure of the loan as per IndiaLaw LLP.
This matters because two things can push the ratio upward over time: accrued interest adding to the outstanding balance, and a fall in gold prices reducing the collateral's current value. If either pushes the outstanding amount above 75% of the gold's current assessed value, the lender may ask for a partial repayment or additional gold to bring the gold loan LTV breach back within the cap.
For borrowers, the practical takeaway on LTV monitoring gold loan terms is simple: borrowing a little below the maximum from the outset leaves a buffer, reducing the chance of a top-up request if prices move.
Frequently Asked Questions
A 75% LTV applies to gold loans above Rs. 5 lakh under the RBI's tiered framework. For example, gold assessed at Rs. 8 lakh would support a maximum loan of around Rs. 6 lakh, subject to the lender's valuation and policies.
The 75% cap for loans above Rs. 5 lakh applies to banks, NBFCs and cooperative lenders regulated by the RBI. An individual lender may set a lower LTV at its discretion, but cannot exceed 75% for this loan band.
Under the RBI Directions, valuation is based on the lower of the 30-day average closing price or the previous day's closing price of equivalent purity, as published by IBJA or a SEBI-recognised exchange. The value is adjusted for actual purity, and the weight of any stones in jewellery is deducted.
The applicable LTV tier is determined by the total sanctioned amount per borrower per lender, not by splitting. Attempting to split a loan to reach a higher tier is generally not permitted, and lenders apply the tier based on the total amount sanctioned.
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
