Indialends, 08 Sep 2026

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Why Making Charges, Stones & Kundan Work Don't Count in a Gold Loan

What’s Inside This Blog?

The Core Principle: You're Borrowing Against Gold, Not Art 1. Net Gold Weight Loan Calculation 2. Diamond Jewellery and Gold Loans 3. Kundan, Meenakari, and Wastage/Making Charges Valuation 4. Hallmark 916 Gold Loans Example: Two Jewellery Pieces, Same Price, Different Loan Value Common Mistakes Borrowers Make Expert Tips for Better Gold Loan Valuation Get a Transparent Gold Loan Valuation Conclusion

If you've ever pledged an intricately designed piece of jewellery, say, a Kundan necklace or a diamond-studded gold set, you may have been surprised at how modest the loan amount turned out to be, especially compared to what you originally paid for it.

The reason is simple, even if it feels unfair at first: a gold loan values gold, not craftsmanship. The stones, the Kundan work, the intricate design, the GST you paid at purchase, none of that factors into your loan valuation. Only the actual gold content does.

Let's break down exactly how this works, so you know what to expect before you pledge.

The Core Principle: You're Borrowing Against Gold, Not Art

When you buy jewellery, you're paying for gold plus craftsmanship, the artistry, the design complexity, the setting of stones, and the brand or jeweller's premium. A gold loan strips all of that away and looks only at one thing: the actual weight and purity of gold content in the piece.

This is why two jewellery items of the same overall price, one plain, one heavily designed, can fetch very different loan amounts if the plain piece happens to have more actual gold weight.

1. Net Gold Weight Loan Calculation

Every gold loan valuation starts with separating the net gold weight from the ornament's total weight.

How banks weigh gold ornaments:

• The ornament is weighed on a calibrated scale to get gross weight
• Non-gold components, stones, beads, enamel, thread, or other attachments, are identified and their weight estimated or physically removed for weighing where possible
• This non-gold weight is deducted to arrive at net gold weight
• The loan amount is calculated only on this net gold weight, at the applicable purity and rate

2. Diamond Jewellery and Gold Loans

Diamond jewellery gold loan valuation follows the same core principle, but diamonds add an extra layer of complexity:

• Diamonds have no meaningful resale/collateral value in a typical gold loan context, most lenders exclude them entirely from valuation
• The gold used to hold the diamond setting (the net gold weight) is what gets valued
• Some lenders may decline diamond-heavy jewellery altogether if the gold content is too low relative to the piece's overall weight, since it becomes commercially unviable to process

Practical tip: If you're planning to pledge jewellery specifically for a loan, plain or lightly-worked gold pieces almost always give you a better loan-to-effort ratio than diamond or heavily stone-studded jewellery of similar market price.

3. Kundan, Meenakari, and Wastage/Making Charges Valuation

Kundan work, meenakari (enamel work), and similar traditional techniques often involve setting stones or glass into gold frames, or adding coloured enamel, both of which reduce the effective gold percentage of the total piece weight, even though the piece may look elaborate and "heavy."

Wastage and making charges valuation refers to the cost you originally paid the jeweller for: skilled labour to create the design, wastage of gold during the crafting process (a jeweller's standard practice, usually billed as a percentage), and design complexity premiums for intricate work like Kundan or filigree.

None of this cost is recovered in a gold loan valuation. The lender doesn't care how many hours of skilled craftsmanship went into your necklace, only how many grams of gold, at what purity, are actually present.

4. Hallmark 916 Gold Loans

Hallmark 916 refers to 22-karat gold that's been certified by the Bureau of Indian Standards (BIS) as containing 91.6% pure gold, the "916" denotes this purity level per 1,000 parts.

Hallmarked jewellery generally has a smoother valuation process because:

• The purity is already certified, reducing the need for extensive in-house testing
• Lenders can process hallmarked gold loan applications faster, since verification is simplified
• It reduces disputes about purity between borrower and lender

If your jewellery isn't hallmarked, most lenders will still accept it, but will conduct their own purity testing (often using methods like acid testing or XRF/karat meter testing) before finalising valuation, which can add some processing time.

Example: Two Jewellery Pieces, Same Price, Different Loan Value

Piece A – Plain Gold Bangles: Gross weight 50 grams, plain minimal design, net gold weight ~49 grams (negligible deduction), purity 22K, hallmarked. Original purchase price ₹3,40,000 (including ~5% making charges).

Piece B – Kundan Necklace Set: Gross weight 50 grams, heavy Kundan and stone work, net gold weight ~34 grams (significant deduction for stones/setting material), purity 22K. Original purchase price ₹3,40,000 (including ~22% making charges for intricate work).

Even though both pieces cost the same to buy, Piece A fetches a meaningfully higher gold loan amount, purely because more of its weight is actual gold, not craftsmanship or stone-setting material.

Common Mistakes Borrowers Make

• Expecting loan value close to purchase price, without accounting for making charges paid at purchase
• Assuming heavier jewellery always means a higher loan, without checking net gold weight
• Pledging diamond or heavily stone-studded pieces expecting full market value consideration
• Not asking for the net weight breakup before accepting the lender's valuation
• Assuming all lenders use the same wastage/deduction methodology, this can vary slightly between banks and NBFCs
• Not hallmarking jewellery before visiting multiple lenders, leading to repeated purity testing and delays

Expert Tips for Better Gold Loan Valuation

• Pledge simpler, less stone-studded gold pieces, when possible, they yield a better loan amount relative to their overall weight
• Ask for a written net weight and purity certificate from the lender before finalising the loan
• Get jewellery hallmarked in advance if you anticipate needing a gold loan in the future, it speeds up processing and reduces valuation disputes
• Don't rely on your original purchase invoice as a loan value estimate, it includes making charges and GST that don't count toward loan valuation
• If you have both plain and heavily designed pieces of similar value, pledge the plainer one for a better loan-to-weight outcome

Get a Transparent Gold Loan Valuation

Check your gold loan eligibility on IndiaLends and compare offers from multiple lenders with clear, upfront net weight and purity-based valuation, no surprises at the counter.

Check Your Gold Loan Eligibility Now

Conclusion

A gold loan values exactly what its name suggests, gold, and nothing else. Making charges, stone work, Kundan craftsmanship, and design complexity, however valuable they were at the time of purchase, don't factor into your loan amount. Understanding this before you pledge helps set the right expectations, and choosing simpler, higher-purity pieces (where you have the option) can genuinely get you a better loan amount for the same overall jewellery value.

Related reading: Gold Loan LTV Explained: Why You Never Get 100% of the Jeweller's Quote and Gold Loan vs Selling Gold: What to Do When You Need Money in 48 Hours.