Borrowers often assume that a public sector bank and a non-banking financial company will offer different loan-to-value ratios against the same jewellery. Historically, separate regulatory instructions and business models created differences. That gap has narrowed. Under the RBI’s harmonised collateral framework, regulated lenders face common maximum LTV ceilings for consumption loans. Yet the amount offered on a gold loan may still vary because a ceiling isn’t a guaranteed entitlement. Public banks and NBFCs can adopt lower internal ratios, use different product designs and assess operational risks differently. Purity, net gold weight and borrowing purpose also shape the result. The useful comparison is between the common regulatory boundary and each lender’s actual sanction policy. Two compliant lenders can still value risk differently while remaining within the same overall regulatory limit.

What LTV Ceilings Apply From April 2026?

Loan-to-value, or LTV, measures the outstanding loan against the assessed value of eligible gold collateral. The RBI directions, required to be followed no later than April 1, 2026, set tiered maximum ratios for consumption loans across regulated entities:

• up to ₹2.5 lakh: 85%;
• above ₹2.5 lakh and up to ₹5 lakh: 80%;
• above ₹5 lakh: 75%.

The prescribed ratio must be maintained throughout the tenor. For bullet-repayment loans, the calculation must consider the total amount payable at maturity, not merely principal. This framework means public banks and RBI-regulated NBFCs don’t have separate ceilings because of institutional category. A lender may, however, sanction below the permitted maximum. Internal risk limits, gold-price volatility, loan size and portfolio concentration can lead to a more conservative offer.

Why May Public Banks Offer a Different Effective LTV?

Public sector banks operate broad retail and agricultural portfolios, backed by branch networks and centralised credit policies. Their products may distinguish between consumption and eligible income-generating or agricultural purposes. Documentation can differ, as the lender may need to establish end use and classification under applicable norms.

Some banks may keep an internal margin above the regulatory minimum to protect against a fall in gold prices or accrued interest. They may also use standard loan slabs that produce an effective LTV below the ceiling. A borrower seeking ₹2 lakh against jewellery valued at ₹3 lakh, for example, would have an LTV of about 66.7%, even though a higher maximum may be allowed. Pricing, tenure and repayment structures can influence that decision, alongside the customer’s stated need and the bank’s product policy.

Why Do NBFC Offers Sometimes Look More Flexible?

Gold-focused NBFCs often build operations around specialised branches, trained valuers and several repayment schemes. This can make the process appear flexible when customers compare service hours, documentation support or renewal options. A gold loan app may help with account servicing, depending on the lender. None of these features changes the regulatory LTV ceiling.

An NBFC may offer different per-gram amounts across schemes because the embedded margin, repayment method and accrued interest assumptions vary. Conversely, it may choose a lower LTV for high-value jewellery, volatile market conditions or operational risk. A gold loan calculator can provide an indicative amount, but final eligibility follows physical appraisal. Public banks and NBFCs may use different customer-facing formats, yet both must base valuation on actual purity and net gold content under the prescribed method.

How Do Valuation and Pricing Affect the Comparison?

LTV comparisons are meaningful only when collateral value is calculated consistently. The lender must deduct stones, gems, lac, strings, fastenings and other non-gold elements. Making charges and brand premiums aren’t added. Eligible gold is valued using the lower prescribed preceding-day price or relevant 30-day average, adjusted for caratage, as per applicable norms.

Borrowers should compare more than the rupees offered per gram. Relevant points include:

• assessed purity and net weight;
• reference price used for valuation;
• sanctioned amount and effective LTV;
• interest accrued within the LTV calculation;
• repayment structure, fees and penal charges.

The disclosed gold loan interest rate may differ between a public bank and an NBFC because their funding costs, operations and pricing strategies vary. A higher LTV combined with a higher total cost isn’t automatically the better option.

Conclusion

The distinction is no longer a simple bank-versus-NBFC LTV rule. For consumption loans, the April 2026 framework applies common tiered ceilings across regulated lenders. Differences arise below that ceiling, through internal margins, product slabs, purpose classification, repayment design and appraisal outcomes. Public banks may follow centralised policies, while specialised NBFCs may offer more scheme variations and assisted servicing. Neither model guarantees a larger sanction against identical jewellery. Borrowers should examine the valuation certificate, effective LTV, total repayment and collateral-release terms together. The suitable offer generally meets the funding need without unnecessary borrowing, while keeping charges and repayment obligations clearly understood.