Methodology for calculation of Net weight and Value of gold content of the eligible collateral for determination of LTV ratio:
Gross Weight will be measured through Weighing Machine kept at our branch.
Net Weight = Gross Weight minus the weight of stones and other deductions
Gold collateral shall be valued based on the price of 22 carat gold. If the gold collateral is of purity less than 22 carats, the net weight shall be translated into the equivalent of 22 carat purity. In other words, collateral of lower purity of gold shall be valued proportionately. For Example, if an ornament is of 20 carat with gross weight as 46 grams and stone deduction as 2 grams, its normal net weight will be 44 grams and the “Net weight calibrated to 22 carat Purity” shall be 40 grams (i.e. 44 grams*20/22 = 40 grams)
Gold Rate: Lower of (a) the average closing price of 22 carat gold for the preceding 30 days, or (b) the closing price of 22 carat gold on the preceding day, quoted by the India Bullion and Jewellers Association Ltd. (IBJA) shall be considered as the Gold Rate of 22 carat for the purpose of valuation.
Value of Gold collateral = “Net weight calibrated to 22 carat purity” X Gold Rate of 22 carat as calculated above. The LTV as prescribed under regulatory guidelines shall be applied on the Value of Gold collateral, arrived as per above methodology. to determine eligible loan amount which shall be subject to repayment capacity assessment, wherever applicable, as per company’s policy.
