What Is LTV Ratio in a Gold Loan and Why Is 75% Misleading?
LTV (Loan-to-Value) = Loan Amount ÷ Gold Market Value × 100. RBI caps it at 75%. But the "value" in this calculation is the bank's internal valuation, not the actual market price. Banks typically use gold rates 5–15% below market, so 75% LTV on the bank's valuation translates to 60–65% on actual market value.
Additionally, processing fees (0.5–2%), valuation fees, stamp duty, and documentation charges are deducted from the sanctioned amount. This further reduces the effective LTV to as low as 55% on actual market value.
How Do Banks Calculate the LTV Ratio They Give You?
Step 1: Bank assays your gold (often at lower purity than actual). Step 2: Bank uses its own rate (lower than market). Step 3: Bank applies LTV to this reduced value. Step 4: Fees deducted from sanctioned amount. Net result: effective LTV of 55–65% on actual market value.
Use this calculator with the market rate (auto-fetched) and ask your bank for their internal rate. The gap tells you exactly how much you're losing.
How Does Gold Loan LTV Compare Across SBI, HDFC, Muthoot, and Manappuram?
All major lenders advertise 75% LTV, but effective LTV varies. NBFCs (Muthoot, Manappuram) typically offer higher net disbursement per gram because their internal gold rates are closer to market rates. Banks (SBI, HDFC) apply larger haircuts.
Compare specific matchups: SBI vs HDFC | Muthoot vs Manappuram | All Banks