Gold pledged for the loan is evaluated using standardized purity-testing methods and equipment, such as karat meters etc. In addition, weight of dirt, stone etc. is deducted while arriving at the net weight of the gold jewelry equivalent to 22 Karat. Customers are informed about the assessed purity and weight of the pledged gold, and the loan amount is determined based on applicable loan-to-value (LTV) norms and prevailing gold prices, in accordance with regulatory guidelines. Its market value is calculated by taking the 30-day average gold rate of 22 Karat gold.

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Here’s An Example:
Calculating the Gold loan amount using the per gram rate is very simple. For example, if someone has net 10 grams of 22-carat gold and the per gram market value is INR 10000, the total market value of the gold items is INR 1,00,000. This means that he or she can borrow up to INR 75,000 (75% of the total market value or higher as may be permitted as per applicable guidelines) against the gold ornaments.