What is LTV (loan to value)?
The loan as a percentage of the security's value.
The outstanding against the value of the security: for a gold loan, against the value of the pledged ornaments at the applicable rate; for a property loan, against the assessed value. LTV is a ceiling at sanction and a monitored figure afterwards, because the value of the security moves and the outstanding does too.
How is LTV calculated?
Outstanding divided by eligible security value. For gold, eligible value is derived item by item — net weight after deductions, converted to a common purity basis, priced at the rate effective on the day being asked about.
LTV: a worked example
A packet of ornaments with a 22-karat equivalent net weight of 40g at ₹6,800 a gram is worth ₹2.72 lakh. An advance of ₹1.9 lakh is 69.9% LTV. If the rate falls to ₹6,200 the same advance is 76.6%, with nothing having happened to the loan.
Why does LTV matter?
Because the ratio moves without anybody doing anything. A cap tested once at sanction is not a monitored LTV, and for a secured book that drifts, the difference between the two is the whole risk.
What the regulations say about LTV
The Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025 require LTV to be maintained on an ongoing basis, and permit renewal or top-up only within the permissible LTV.
What a lending system has to do about LTV
Eligible value is recomputed from the packet's items against the current rate whenever it is needed — at part-release, top-up and renewal — rather than read from a figure stored at sanction. A part-release is priced by revaluing the packet WITHOUT the item, so the answer is the post-release position.
Related terms
- Foreclosure — Closing a loan by paying the whole outstanding early.
- NPA (non-performing asset) — An account where payment is overdue beyond the prescribed period.
From the people who wrote this
Run your lending on Lenviq
The section above describes what a lending system has to do about this term. Lenviq does it — on every account, computed at day-end, with the direction it comes from recorded against it.
Lenviq is loan origination, servicing and accounting for NBFCs, built by FastLegal Technologies.