Gold Loan Per Gram Rate Explained: Price × Purity × LTV

The "gold loan per gram" rate is the most a lender will lend for each gram of pure gold content in your jewellery. It comes from three numbers multiplied together: a published reference price for the gold's purity, the purity of your jewellery, and RBI's loan-to-value (LTV) limit of 85%, 80% or 75%. If the 22-carat reference price is ₹12,800 a gram, the maximum at 85% LTV is ₹10,880 per gram of net gold, before any deductions for a bullet loan.

The formula

Per-gram loan = Reference price for your purity × LTV limit

Total loan = Per-gram loan × Net weight of gold

Each part has a specific meaning under RBI's Lending Against Gold and Silver Collateral Directions, 2025, which lenders had to adopt by 1 April 2026.

1. Reference price

Lenders must use the lower of:

• the average closing price for gold of that purity over the previous 30 days, or
• the previous day's closing price,

as published by the India Bullion and Jewellers Association (IBJA) or a SEBI-regulated commodity exchange. Using the lower figure means a sudden price spike does not immediately raise your loan amount, and the per-gram rate a lender quotes will often lag the price you see on the news.

Example: the 30-day average for 22-carat gold is ₹12,800 a gram and yesterday's close was ₹13,200. The lender must use ₹12,800. All prices in this article are illustrative; actual rates change daily.

2. Purity

Gold is valued for its actual purity. If a price is not published for your exact purity, the lender uses the nearest available one and adjusts proportionately. Common jewellery grades:

Lenders test purity at the branch, and RBI requires the testing to happen in your presence.

3. LTV limit

RBI's LTV cap depends on the size of your total consumption gold loans with that lender, not on the weight of gold:

For bullet repayment loans, the LTV is checked on principal plus interest due at maturity, so the amount you receive per gram is lower. The gold loan guide explains these limits in detail.

Per-gram table at a ₹12,800 reference price

Using a 22-carat reference price of ₹12,800 and proportional values for other purities:

The bullet column divides the 85% figure by 1.10, because principal plus 10% simple interest for 12 months must fit inside the LTV cap. These are maximums. A lender can always offer less, and some schemes offer a lower per-gram amount in exchange for a lower interest rate.

Worked example: from jewellery to loan amount

Priya brings a 22-carat necklace with a gross weight of 25 grams.

Step 1: net weight. The lender deducts 3 grams for stones, the clasp and other non-gold parts. Net gold weight: 25 − 3 = 22 grams. The deduction must be explained to her and recorded on the valuation certificate.

Step 2: value. 22 g × ₹12,800 = ₹2,81,600.

Step 3: LTV. 85% × ₹2,81,600 = ₹2,39,360. This is below ₹2.5 lakh, so the 85% tier applies.

• EMI or interest-paying loan: up to ₹2,39,360, or ₹10,880 per gram.
• 12-month bullet at 10%: principal × 1.10 ≤ ₹2,39,360, so up to about ₹2,17,600, or about ₹9,891 per gram.

A larger pledge changes the tier. If Priya instead pledged 40 grams of net 22-carat gold worth ₹5,12,000, an 85% loan would be ₹4,35,200, which is above ₹2.5 lakh. So the 80% tier applies: 80% × ₹5,12,000 = ₹4,09,600, or ₹10,240 per gram. The per-gram amount falls as the loan size crosses each threshold.

Before choosing between EMI and bullet, compare monthly payments in our EMI calculator and read gold loan bullet vs EMI repayment.

Why your offer may be lower than the advertised rate

Lenders and comparison sites often advertise a single "per gram" figure. Your actual amount may be lower because:

• The ad assumes 22-carat gold. Lower purity means proportionately less.
• Gross weight is not net weight. Stones, enamel, lac and hooks are deducted.
• The reference price lags. If prices rose recently, the 30-day average will be below today's price.
• Bullet loans include interest in LTV.
• Your total loan may cross ₹2.5 lakh or ₹5 lakh, dropping the LTV to 80% or 75%.
• The lender's own policy may set a lower LTV for certain schemes, purities or locations.

How price moves change your per-gram amount

Because lenders use the lower of the 30-day average and the previous day's close, the per-gram figure reacts unevenly to price changes:

• When prices rise quickly, the 30-day average trails behind, so the lender keeps using the lower average. Your per-gram amount rises only gradually over the following weeks.
• When prices fall, the previous day's close drops below the average and becomes the reference immediately. Your per-gram amount falls straight away.

Example: if yesterday's 22-carat close drops to ₹12,200 while the 30-day average is still ₹12,800, the lender must use ₹12,200. At 85% LTV, the per-gram amount falls from ₹10,880 to ₹10,370, a drop of ₹510 per gram. On 22 grams of net gold, that is about ₹11,220 less loan.

This rule protects lenders from overvaluing gold, but it also matters for existing loans, since LTV must be maintained throughout the tenure. A sharp fall can lead to a request to pay down part of the loan.

Limits on what you can pledge

The RBI directions also set quantity limits across all gold loans to one borrower:

• Gold ornaments and jewellery: up to 1 kilogram in total.
• Gold coins: up to 50 grams in total.
• Not accepted: primary gold such as bars and bullion.

If you do not have purchase bills, lenders can accept a self-declaration of ownership.

How to check your valuation

1. Watch the purity test. It must be done in your presence.
2. Ask for the valuation certificate showing carat, gross weight, net weight, deductions, a photograph and the value at sanction. It is issued in duplicate; keep your copy safe.
3. Check the reference price used against the published IBJA or exchange price for that date.
4. Confirm the LTV applied and whether it reflects bullet interest.
5. Read the Key Facts Statement for the rate, APR and charges before signing. Our guide to gold loan interest calculation shows how to check the interest itself.

If you plan to keep the loan beyond a year, note that the gold is revalued at renewal, so the per-gram figure can rise or fall. If you hold gold mainly as an investment rather than jewellery, gold ETF vs SGB vs digital gold compares the other forms.

Key takeaways

• Per-gram loan = reference price for your purity × RBI LTV limit; total loan = per-gram amount × net gold weight.
• Lenders must use the lower of the 30-day average and previous day's closing price from IBJA or a SEBI-regulated exchange.
• 18-carat gold gets about 18% less per gram than 22-carat gold because it contains less gold.
• LTV is 85% up to ₹2.5 lakh, 80% up to ₹5 lakh and 75% above, and bullet loans count interest toward the cap.
• Stones and fittings are deducted, so always check the net weight and valuation certificate.