How is Gold Loan Value Per Gram Calculated?

• Purity of your gold
• Net eligible gold weight
• Applicable reference gold price
• Loan-to-value ratio offered under the loan scheme

Each factor affects how much you can borrow. Two ornaments with the same gross weight may receive different valuations if they have different purity levels or contain different amounts of stones and other materials.

How is the Net Gold Weight Determined?

The lender first weighs your complete ornament to record its gross weight. This weight may include gold as well as:

• Stones and gems
• Pearls and beads
• Lac or wax
• Enamel
• Strings
• Fastenings
• Other non-gold materials

A trained appraiser examines the ornament and estimates the weight of these materials. The estimated non-gold weight is then deducted from the gross weight.

For example:

The loan calculation will use 25 grams rather than the full 30 grams. The lender generally does not remove gemstones from your ornament. If the ornament contains extensive stonework or its gold content cannot be assessed reliably, the lender may make a larger deduction or decline to accept it.

Under RBI rules, the appraisal must take place in your presence. The lender must explain the deductions and provide a certificate showing the gross weight, net weight, purity, deductions and assessed value.

How Does Gold Purity Affect the Value?

Gold purity is measured in carats. Pure gold is 24 carats, while jewellery is commonly made using 18-carat, 20-carat or 22-carat gold. The lender tests the purity using its approved appraisal method. A higher purity generally produces a higher assessed value per gram because the ornament contains more gold. If the available reference price is for 24-carat gold, the lender can adjust it to match your ornament's purity:
 

Suppose the 24-carat reference price is ₹10,000 per gram and your jewellery is 22 carats:
 

Example

₹10,000 x 22 / 24 = ₹9,166.67 per gram

This is the purity-adjusted value before the LTV ratio is applied. If the lender already uses a published reference price for 22-carat gold, the purity fraction should not be applied again.

Disclaimer: The above calculation is for illustrative purposes only. Ujjivan does not take responsibility for the accuracy of the information provided herein. Please contact the bank to know more about your gold loan eligibility.

Which Gold Price Does the Lender Use?

Under the RBI framework applicable from 1 April 2026, the lender must use the lower of:

• The average closing price for gold of the relevant purity during the preceding 30 days
• The closing price for that purity on the previous day

The rate must be published by the India Bullion and Jewellers Association or a commodity exchange regulated by SEBI. This method helps reduce the effect of short-term price movements. It also means that the lender's reference rate may be lower than the retail gold price you see on the application date.

How is the Gold Loan Value Per Gram Calculated?

If the starting reference rate is for 24-carat gold, you can use this formula:

If the reference price already corresponds to your gold's actual purity, use:

The total estimated loan amount is:

Gold Loan Calculation Example

Suppose you pledge jewellery with the following details:

First, calculate the assessed gold value:

Next, calculate the loan value per gram:

Finally, calculate the estimated loan amount:

Based on these figures, your estimated loan value is ₹7,200 per gram and your total eligible loan amount is ₹3.60 lakh. The final amount may be lower if the lender applies a lower LTV under its internal policy.

Disclaimer: The above calculation is for illustrative purposes only. Ujjivan does not take responsibility for the accuracy of the information provided herein. Please contact the bank to know more about your gold loan eligibility.

How Does the LTV Ratio Affect Your Gold Loan?

The loan-to-value ratio (LTV) is the percentage of the assessed gold value that the lender can offer as a loan. For consumption gold loans, the current RBI ceilings are:

These percentages are maximum limits. Your lender may offer a lower LTV based on its policies, the selected scheme and the repayment structure. For a bullet-repayment loan, where both principal and interest are payable at maturity, the lender must consider the total amount repayable at maturity while calculating the LTV.

Why Can the Per-Gram Value Differ Between Lenders?

You may receive different per-gram quotations from two lenders even when you pledge the same jewellery. The difference may arise from:

• Purity-testing results
• Estimated deductions for stones and other materials
• Reference rate used on the valuation date
• LTV offered under the selected scheme
• Internal lending and risk policies
• Treatment of interest under the repayment structure

An advertised high value per gram does not always mean that the gold loan is less expensive. You should also compare the interest rate, processing and appraisal charges, repayment method, tenure and auction terms.

Final Thoughts

Your gold loan value per gram is based on the gold content of your jewellery, not its purchase price or retail value. The lender first determines the net eligible weight and purity, applies the prescribed reference price and then uses the applicable LTV ratio.

Before accepting the loan, check the appraisal certificate provided by the lender. Confirm the gross weight, deductions, net weight, purity and assessed value recorded in it. This will give you a clear view of how your final loan amount was calculated.

Disclaimer:

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