75% LTV Gold Loan: Rules That Apply When Your Loan Exceeds INR 5 Lakh
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If your gold loan is above INR 5 lakh, the most you can borrow is 75% of your gold's value. That is the top tier of the RBI's structure that took effect on 1 April 2026. Smaller loans get a higher share, up to 85% below INR 2.5 lakh, but large loans stay at the conservative 75% cap. The gold is valued at IBJA rates. This guide explains how the 75 percent LTV gold loan rule works for bigger loans, how to calculate what you can get, and what happens if gold prices move during the loan. A Gold Loan from IIFL Finance follows these tiers.
What Is LTV in a Gold Loan?
LTV, or loan-to-value, is the percentage of your gold's assessed value that a lender will give you as a loan. The formula is: LTV = (loan amount divided by gold value) times 100. If your gold is worth INR 8 lakh and the LTV is 75%, you can borrow up to INR 6 lakh. The rest is the lender's safety margin, which protects them if gold prices fall. For large loans, that margin is kept wider, which is why the cap sits at 75% rather than the 85% small borrowers get.
The Three-Tier LTV Structure and Where Big Loans Sit
The RBI replaced the old flat cap with three tiers by loan size. Big loans land in the top band.
|
Loan amount band |
LTV ratio |
Loan on INR 8 lakh gold |
|
Up to INR 2.5 lakh |
85% |
Capped by band, not gold |
|
INR 2.5 lakh to INR 5 lakh |
80% |
Capped by band, not gold |
|
Above INR 5 lakh |
75% |
Up to INR 6 lakh |
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 tier is set by the loan amount, not your income or credit score. Once the loan crosses INR 5 lakh, the 75% cap applies to the whole loan. For loans above INR 2.5 lakh, the lender also runs a detailed credit assessment, including your repayment capacity, which is a step small borrowers below INR 2.5 lakh can skip.
How to Calculate Your Loan Above INR 5 Lakh
Working out your maximum is straightforward once you know your gold's IBJA-based value. Take the assessed value, apply 75%, and that is your ceiling for a loan in this tier. Remember that only the gold content counts, so stones and non-gold parts are stripped out, and purity is adjusted to a standard benchmark first. The catch for large bullet-repayment loans is that the interest due at maturity is counted within the LTV, so the actual cash disbursed can be a little below a flat 75% of the gold value.
Step-by-Step Example (Loan Above INR 5 Lakh)
Suppose your gold is assessed at INR 10 lakh after purity adjustment. At 75%, the LTV ceiling is INR 7.5 lakh. If you want a bullet-repayment loan where interest builds up and is paid at the end, the lender includes that expected interest inside the 75% limit, so the amount handed to you would be somewhat less than INR 7.5 lakh to leave room for the interest. On an EMI loan, where you pay interest along the way, more of the 75% is available as principal up front.
What Happens If Gold Prices Rise or Fall During the Loan?
The LTV must be maintained through the whole loan, not just on day one. If gold prices fall sharply, your loan could breach the 75% cap relative to the new, lower gold value. The lender may then ask you to pledge a little more gold or part-pay to bring the ratio back in line. If prices rise, you have more headroom, and at renewal or top-up you may be able to borrow a bit more against the same gold. This ongoing-LTV rule is why big loans keep a wider safety margin. Plan for some price movement rather than borrowing right up to the ceiling.
Conclusion
For gold loans above INR 5 lakh, the 75% LTV cap is the rule, with the gold valued at IBJA rates and the ratio maintained through the loan. Large loans also need a full credit assessment. Borrowing a little below the ceiling leaves a buffer against price swings, which is sensible for a big loan. If you need a large amount against gold, a Gold Loan from IIFL Finance follows these tiers with transparent valuation.
Frequently Asked Questions
Why is the LTV only 75% for loans above INR 5 lakh?
The RBI set a tiered structure that gives small borrowers a higher LTV and keeps large loans more conservative. Loans up to INR 2.5 lakh can reach 85%, but anything above INR 5 lakh is capped at 75%. The wider safety margin on big loans protects both borrower and lender if gold prices fall, since a large loan carries more risk. The tier is decided purely by the loan amount, so once you cross INR 5 lakh, the 75% cap applies to the full loan.
How much can I borrow against gold worth INR 10 lakh?
If your loan falls in the above-INR-5-lakh tier, the ceiling is 75% of the assessed value, so about INR 7.5 lakh on gold valued at INR 10 lakh. But only the gold content is counted, so stones and non-gold parts are excluded and purity is adjusted first, which can lower the assessed value. For a bullet-repayment loan, the interest due at maturity is included within the 75%, so the actual amount disbursed may be a little less.
Does my credit score affect the LTV on a large gold loan?
No. The LTV tier is set by the loan amount, not your credit score. Above INR 5 lakh, the cap is 75% regardless of your score. That said, for loans above INR 2.5 lakh, the lender does run a detailed credit assessment, including your repayment capacity, and a strong credit profile can help with approval and the rate offered. So your score can shape the terms at the edges, but it does not change the regulatory LTV cap on the loan.
What if gold prices fall after I take a large gold loan?
The LTV has to be maintained throughout the loan. If gold prices drop enough that your outstanding loan exceeds 75% of the gold's new value, the lender may ask you to pledge additional gold or make a part-payment to restore the ratio. This is why borrowing right up to the 75% ceiling on a large loan is risky. Leaving a buffer, borrowing a little less than the maximum, gives you room to ride out normal price movement without a margin call.
Is a credit assessment required for gold loans above INR 5 lakh?
Yes. For any gold loan above INR 2.5 lakh, which includes all loans above INR 5 lakh, the lender must carry out a detailed credit assessment covering your repayment capacity. Loans up to INR 2.5 lakh can skip this and rely mainly on the gold and basic KYC. So a large gold loan is still secured by your gold, but the lender will also look at your ability to repay, which is a change from the earlier practice of assessing the gold alone.
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
