What is the difference between Regular EMI and Bullet Repayment Gold Loans?

In a Regular Monthly EMI scheme, the borrower pays a fixed amount every month comprising both principal reduction and interest. In a Bullet Repayment Scheme (statutorily capped at 12 months by the RBI), the borrower makes ZERO monthly payments during the tenure; the entire principal loan amount along with accrued compound interest is paid together as a single lump sum at the end of the loan tenure.

Which is cheaper for a gold loan: Public Sector Banks or NBFCs?

Public Sector Banks (such as State Bank of India, Punjab National Bank, Bank of Baroda, and Canara Bank) offer significantly lower interest rates, typically ranging between 8.50% and 10.50% per annum with minimal processing fees (0.25% to 0.50%). Specialized NBFCs (such as Muthoot Finance and Manappuram Finance) charge much higher interest rates (ranging from 14.00% to 24.00%), but offer faster 15-minute cash disbursals, doorstep services, and flexible repayment top-ups.

Do banks deduct stone and gem weights during gold loan valuation?

Yes. Per statutory appraisal rules, banks and NBFC appraising jewellers strictly deduct the gross weight of all non-gold materials—including diamonds, synthetic stones, pearls, and wax filling (lac). The loan eligibility is calculated strictly on the net pure gold weight (carat purity 18K, 22K, or 24K).

What happens if a borrower defaults on a gold loan in India?

If interest or principal remains unpaid beyond the agreed tenure, lenders issue a 30-day statutory notice. If not cured, the lender has the legal right under the SARFAESI Act and RBI guidelines to auction the pledged physical gold ornaments through a transparent public auction, recover the outstanding principal, interest, and auction costs, and refund any surplus balance to the borrower’s bank account.

RBI 75% LTV Statutory Guidelines • FY 2026–27

Gold Loan Eligibility & EMI Calculator

Determine your maximum loan eligibility per gram of 22K, 24K, or 18K gold under the Reserve Bank of India’s 75% Loan-to-Value (LTV) ceiling. Compare regular monthly EMIs against zero-monthly-outflow bullet repayment schemes and compare Public Sector Bank rates with specialized NBFCs.

Verified by Rajesh Pathak, Senior Tax & Banking Advocate

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Last Updated: November 2026 (Reflecting FY 2026–27 Statutory Guidelines)

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Authority: RBI Master Direction (NBFC & Banking Gold Advances) & Circular DNBR.CC.PD.No.043

Quick Jewellery & Bullion Presets

Gold Purity Grade (BIS Hallmark)

24K Pure Gold Market Rate (₹ per 10 grams)

₹

₹60,000₹1,00,000

Valuation for 22K gold = ₹₹7,517 / gram

Gross Gold Weight (Grams)

5 g500 g

Total physical weight of jewellery

Stone / Gem Deduction

0 g35 g

Net gold weight: 40g

Loan Repayment Scheme (RBI Approved)Monthly EMI

Sanctioned Loan Amount (Max 75% LTV: ₹₹2,25,510)

₹

₹10,000₹2,25,510

Effective LTV: 75% of ₹₹3,00,680 market value

Annual Interest Rate (% p.a.)

7 %24 %

Loan Tenure (Months)

3 mo36 mo

1.0 years

RBI 75% LTV Gold Assessment

22K Purity

Monthly EMI Repayment

₹₹19,774/ month

Total Gold Value

₹₹3,00,680

40g @ ₹₹7,517/g

Max Loan Eligibility

₹₹2,25,510

75% RBI LTV limit

Total Interest Payable

₹₹11,778

Over 12 months @ 9.5%

Net Cash In Hand

₹₹2,24,179

After ₹₹1,331 fees

Payment Distribution (Principal vs Interest)

Total Due₹₹2,37,288

Principal Loan

₹2,25,510(94.5%)

Total Interest

₹11,778(4.9%)

Fees & GST

₹1,331(0.6%)

Lender Comparison (Bank vs NBFC)

Public Banks (SBI, PNB)8.50% – 10.00% • Lowest Cost

Private Banks (HDFC, ICICI)10.00% – 13.50% • Fast Approval

NBFCs (Muthoot, Manappuram)14.00% – 22.00% • Instant Cash

Compare 3 Repayment Schemes for ₹₹2,25,510

Choose the structure that matches your monthly cash flow and business liquidity needs

Regular Monthly EMILowest Total Interest

₹₹19,774 / mo

Total Interest: ₹₹11,778

Principal repays progressively every month

Bullet RepaymentZero Monthly Outflow

₹0 / month

Total Interest: ₹₹22,381

Lump sum ₹₹2,47,891 at month 12

Monthly Interest OnlyTraders / Overdraft

₹₹1,785 / mo

Total Interest: ₹₹21,420

Principal ₹₹2,25,510 paid at maturity

Direct Statutory Answer: How Gold Loan Eligibility is Calculated in India

Under RBI regulations, maximum gold loan eligibility is strictly capped at 75% of the market value of net pure gold (excluding all gemstones, pearls, and wax). The pure gold value equals net weight multiplied by the 30-day moving average IBJA rate for that carat purity (91.6% for 22K, 99.9% for 24K, 75.0% for 18K). Borrowers can choose between regular monthly EMIs, monthly interest-only payments, or a 12-month bullet repayment scheme where principal and interest are paid together at maturity.

How Gold Loan Valuation Works (Official RBI Guidelines)

When you pledge ornaments or bullion for a loan, financial institutions follow a four-step statutory valuation methodology before sanctioning credit:

1Gross vs Net Weight (Stone Deduction)

The jeweller-appraiser weighs the jewellery and deducts all non-gold materials—such as diamonds, rubies, cubic zirconia, enamel, and core wax filling (लाख). Only the resulting Net Gold Weight qualifies for valuation.

2Carat Purity Assessment

Purity is verified via BIS Hallmarks or electronic karatometer testing:
• 24 Karat (999): 99.9% pure gold (Multiplier: 1.00)
• 22 Karat (916): 91.67% pure gold (Multiplier: 0.9167)
• 18 Karat (750): 75.0% pure gold (Multiplier: 0.7500)

330-Day Moving Average Benchmark Rate

To prevent speculative lending during intraday market spikes, the RBI mandates that lenders use the average closing gold price of the preceding 30 days published by the Indian Bullion and Jewellers Association (IBJA).

4Statutory 75% LTV Cap

The maximum sanctionable loan is strictly capped at 75% of the total gold value. Borrowers are free to borrow less than the 75% ceiling to reduce their interest outflow and maintain a safety margin against gold price fluctuations.

Gold Loan Repayment Schemes: EMI vs Bullet vs Interest-Only

Unlike unsecured personal loans where you are locked into a standard monthly EMI, gold loans offer three distinct RBI-approved repayment structures:

Scheme Name	Monthly Cash Flow	Principal Repayment	Maximum Tenure	Best Suited For
Regular Monthly EMI	Fixed (Principal + Interest)	Every Month	Up to 36 Months	Salaried employees with steady monthly income
Bullet Repayment Scheme	₹0 per month	100% at Maturity	Max 12 Months (RBI Cap)	Farmers awaiting crop harvest or seasonal traders
Monthly Interest-Only (Overdraft)	Interest only	100% at End of Term	Up to 24 Months	Business owners needing flexible working capital

Lender Comparison: Public Sector Banks vs Specialized NBFCs

Choosing the right lender can save you tens of thousands of rupees in interest charges over a 12 to 24-month horizon. Here is how leading Indian institutions compare for FY 2026–27:

Lender Category	Representative Brands	Interest Rate Range	Processing Fee	Disbursal Turnaround
Public Sector Banks	SBI, PNB, Canara Bank, Union Bank	8.50% – 10.00% p.a.	0.25% – 0.50% (Max ₹500–₹2,000)	1 to 3 Hours (Requires KYC & Appraiser)
Private Sector Banks	HDFC Bank, ICICI Bank, Axis Bank	10.00% – 13.50% p.a.	0.50% – 1.00% + GST	30 to 60 Minutes
Specialized NBFCs	Muthoot Finance, Manappuram Finance, IIFL	14.00% – 22.00% p.a.	₹20 – ₹1,000 or up to 1.5%	10 to 15 Minutes (Instant Cash)

Worked Example: Pledging 50 Grams of 22K Gold in Mumbai

Suppose a borrower pledges 50 grams of 22-karat gold jewellery (with 2 grams of stone weight deducted) when the prevailing 24K pure gold market rate is ₹82,000 per 10 grams:

Gross Weight:50.00 Grams

Stone / Gem Deduction:-2.00 Grams

Net Pure Gold Weight:48.00 Grams

22K Gold Value per Gram (₹8,200 × 0.9167):₹7,517 / gram

Total Appraised Gold Market Value (48g × ₹7,517):₹3,60,816

Maximum 75% LTV Loan Eligibility:₹2,70,612

• Under Bank EMI (9.0% for 12 months): Monthly EMI = ₹23,678 | Total Interest = ₹13,524

• Under NBFC Bullet Scheme (18.0% for 12 months): Monthly Payment = ₹0 | Total Repayment at month 12 = ₹3,23,556 (Interest = ₹52,944)

→ Choosing a public bank over an NBFC saves the borrower over ₹39,420 on the same 50g gold collateral!

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Frequently Asked Questions on Gold Loans (English & हिंदी)

Clear answers to common questions in your preferred language.

Under Reserve Bank of India (RBI) statutory guidelines, banks and NBFCs can sanction up to a maximum Loan-to-Value (LTV) ratio of 75% of the appraised value of gold jewellery. The appraised value is calculated based on the net pure gold weight (excluding stones, gems, and wax) multiplied by the 30-day moving average price of 22-carat or 24-carat gold published by the Indian Bullion and Jewellers Association (IBJA).