What are the implications of an LTV ratio lower than the RBI prescribed limit?

Having a lower loan-to-value ratio while applying for a gold loan simply means you’ve borrowed less against your gold assets, which keeps both you and the lender on the safer side overall.

For instance, say your gold is worth ₹2 lakh but you borrow only ₹1.2 lakh — that’s around 60% LTV, below the RBI’s 75% ceiling. Because you’ve pledged more value, the lender has a bigger safety margin if gold prices dip or fluctuate sharply. Many gold loan lenders prefer this; it shows stronger repayment capacity and usually makes renewals smoother, though it doesn’t always reduce the interest rate straightaway. There’s really no downside, except that you’re tying up a bit more of your gold assets for longer.