The Necklace: An Exhaustive Borrower–Banker Classification

ORNAMENT Sub Series : Gold Jewellery Business : EPISODE 16

When Meera walked up to the gold-loan counter with her wedding necklace in hand, she wasn’t thinking about LTV or purity. She was thinking: ‘Can I get enough to cover one month’s bills without losing this forever?’ That small internal question — not the gold price — is what this whole episode is about.

How a Banker Sees the Necklace

(Cold, technical, recoverability-driven)

• Net gold weight

• Purity (22K / 916)

• Construction risk

• Melt value

• LTV eligibility

Implied message

“This is collateral.”

How a Borrower Feels the Necklace

(Warm, emotional, future-oriented)

• Wedding memory

• Family approval

• Fear of loss

• Hope of redemption

• “Temporary problem”

Implied message

“This is identity.”

The Loan Decision happens on the Left

The emotional burden is carried on the right

Before deciding how much loan to take, you must first understand what kind of necklace you own.

Banks don’t see jewellery the way jewellers or families do.

They see gold recovery risk.

1️⃣ Plain Gold Chains

(Highest Comfort Category)

What it is

• Rope chains

• Box chains

• Curb / anchor chains

• Uniform links

• No stones, no enamel, no hollowing

Why bankers like it

• Pure gold recovery

• Easy to melt

• Predictable purity

• Minimal handling loss

Operational reality

• Closest thing to “raw gold” in jewellery form

Likely LTV👉 70% – 75% (Best-in-class)

2️⃣ Solid Gold Necklaces / Harams

(Mango haram, Lakshmi haram, thick temple harams)

What it is

• Heavy, gold-dominant construction

• Minimal hollow sections

• Traditional solid craftsmanship

Why haircut exists

• Design premium is ignored

• Some melting loss assumed

• Conservative weight deduction

Borrower misunderstanding

“This is premium jewellery”

Bank response: “We lend on gold, not artistry.”

Likely LTV👉 65% – 70%

3️⃣ Long Haram / Layered Necklaces

These are:

• High gram-weight

• Often ceremonial

• Worn infrequently

• Stored deep in lockers

They appeal to borrowers because:

• a single ornament meets a large loan requirement,

• fewer items need to be pledged.

Borrower behaviour: Chosen for efficiency, not comfort. High redemption intent, but high renewal risk if stress lingers.

Long Haram

• Very high gram-weight in a single ornament

• Often layered, sometimes detachable

• Gold mass is spread across length, not compact

• May include hollow elements for wearability

Other Necklaces (short / solid / ceremonial)

• Moderate weight per ornament

• More compact gold concentration

• Easier to judge solidity

• Less structural complexity

Key difference:

A long haram looks heavy because it is long; a solid necklace looks heavy because it is dense.

Behaviour After Pledge (This is where risk appears)

Aspect	Long Haram	Other Necklaces
Initial redemption intent	Very high	Moderate to high
Renewal likelihood	High if stress lingers	Lower
Emotional resistance	Appears late	Appears early
Exit difficulty	Increases sharply over time	Gradual
Stress recognition	Delayed	Earlier

Banker’s View (Silent but decisive)

Long Haram

• Weight meets loan need quickly ✔

• Fewer items to handle ✔

• But:

  • layered construction

  • mixed solidity

  • melting loss assumptions

👉 Results in slightly lower LTV and higher renewal tracking

4️⃣ Temple / Heirloom Necklaces

Often:

• Older designs

• Inherited

• Sentiment-heavy

• Family-linked (mother, grandmother)

These necklaces are:

• rarely chosen first,

• often pledged under compulsion,

• and emotionally loaded far beyond their gold value.

Borrower behaviour: Extreme reluctance to lose. Auction is seen as personal failure, not financial outcome.

5. Mangalsutra-Linked Gold Chains

Though technically necklaces, these are:

• Symbolic

• Identity-linked

• Socially sensitive

They are usually:

• not pledged unless unavoidable,

• or pledged after removing the symbolic elements.

Borrower behaviour: High psychological cost, even if gold weight is modest.

Why This Classification Matters to Borrowers

At the branch counter, all necklaces are:

• weighed,

• purity-tested,

• and valued identically per gram.

But borrowers do not experience them identically.

Each type differs in:

• willingness to pledge,

• tolerance for renewal,

• emotional stress during rollover,

• and pain of non-redemption.

When borrowers unknowingly pledge the wrong type of necklace for a given loan need, they don’t feel the impact immediately.

They feel it:

• at the first renewal,

• at the second extension,

• when interest piles up,

• or when family resistance appears.

Now that we understand what kinds of necklaces exist, the next questions become inevitable:

• Which necklace types are suitable for short-term liquidity?

• Which should be reserved only for last-resort borrowing?

• Why do some necklace loans renew smoothly while others become emotionally suffocating?

• What signals does a borrower send — unknowingly — by choosing one type over another?

That is where behaviour begins.

Behavioural Summary by Necklace Type (Gold Loan Context)

Necklace Type	Typical Borrower Trigger	Borrower Mindset at Pledge	Redemption Intent	Renewal Risk	Banker’s Silent Reading
Plain Gold Chains	Short-term liquidity need	“This is temporary. I’ll get this back.”	Very high	Low	Early-stage stress, manageable
Short / Solid Necklaces	Planned expense or mild stress	“This is valuable but replaceable.”	High	Low–moderate	Stable borrower, good exit probability
Thick / Heavy Chains	Efficiency-driven choice	“One piece should be enough.”	High	Moderate	Value concentration begins
Long Haram / Layered Necklaces	Large loan requirement	“Better to pledge one big ornament.”	Initially high	High if stress persists	Stress masked by efficiency
Multiple Necklaces Together	Escalating financial pressure	“Let me solve this fully now.”	Mixed	High	Duration risk emerging
Temple / Heirloom Necklaces	Compulsion, last options exhausted	“I had no other choice.”	Emotionally desired but delayed	Very high	Structural stress confirmed
Mangalsutra-Linked Chains	Extreme necessity	“I hope no one notices.”	Extremely high emotionally	Variable	Psychological cost exceeds value

Loan Requirement vs Jewel Selection Matrix

Loan Amount Required	Gold Value Needed (₹)	Approx. Gold Weight (grams)	Jewellery Type Best Suited	Why This Works Smoothly
₹50,000 – ₹1,00,000	₹75,000 – ₹1,50,000	9 – 18 g	Plain gold chain / light necklace	Easy redemption, minimal emotional cost
₹1,00,000 – ₹2,50,000	₹1.5 – ₹3.75 lakh	18 – 44 g	Solid chain / short necklace / bangles	Common household jewellery, low resistance
₹2,50,000 – ₹5,00,000	₹3.75 – ₹7.5 lakh	44 – 88 g	Thick chain / solid necklace / limited bangles	Efficient pledge without emotional escalation
₹5,00,000 – ₹7,50,000	₹7.5 – ₹11.25 lakh	88 – 132 g	Long haram / layered necklace	Single-ornament efficiency; renewal watch needed
₹7,50,000 – ₹10,00,000	₹11.25 – ₹15 lakh	132 – 176 g	Long haram + chain / heavy necklace	Works, but signals rising financial stress
₹10,00,000 – ₹15,00,000	₹15 – ₹22.5 lakh	176 – 265 g	Multiple necklaces / bangles set	Family involvement, banker scrutiny increases
₹15,00,000 – ₹25,00,000	₹22.5 – ₹37.5 lakh	265 – 440 g	Heirloom + ceremonial jewellery	High emotional cost, last-resort zone
₹25,00,000+	₹37.5 lakh+	440 g+	Multiple heirloom pieces	Structural stress, auction sensitivity

Quick Borrower Thumb Rules

🔹 Under ₹5 lakh

• Stick to chains and simple necklaces

• Avoid emotionally loaded jewellery

• Expect smooth redemption

🔹 ₹5–10 lakh

• Long harams become attractive

• Watch for renewal dependency

• Still manageable with discipline

🔹 Above ₹10 lakh

• Jewellery choice signals structural stress

• Emotional resistance rises sharply

• Banker monitoring increases

Why This Table Matters (Behavioural Insight)

• Smaller loans should use replaceable jewellery

• Bigger loans force value concentration

• Trouble begins when ornament choice jumps faster than loan need

If the loan amount forces you to pledge jewellery you never intended to touch, the loan is already telling you something important.

Summary :

Why the Necklace Matters — and Where the Story Moves Next

Gold may be valued by weight and purity, but necklaces and chains are chosen by intent.

In this episode, we looked at necklaces not as ornaments, but as signals—of urgency, confidence, hesitation, and expectation. We saw how construction determines valuation, how emotion shapes pledging decisions, and how the same piece of gold is experienced very differently by borrowers and bankers.

For borrowers, a necklace is often pledged with the belief that the need is temporary and redemption is certain.For bankers, it is collateral—measured, discounted, and prepared for recovery if required.

The gap between these two views is where renewal risk, emotional stress, and prolonged borrowing quietly emerge.

Understanding necklaces and chains matters because they are usually the first major step into gold lending. They tell us how a borrower enters the loan—and how they believe the story will end.

In the next episode, we move from entry to continuity.

We will examine bangles—the most frequently repeated, partially pledged, and renewed form of gold collateral—and explore how they transform gold loans from one-time solutions into ongoing arrangements.

Because in gold lending, necklaces show intent — bangles reveal duration.