In a major move to expand access to secured credit, the Reserve Bank of India (RBI) has introduced comprehensive guidelines for lending against silver, marking the first time silver has been formally included alongside gold in loan collateral regulations. The new rules, outlined in the circular titled “Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025”, will come into effect from April 1, 2026.
Who Can Offer Silver Loans?
Under the new framework, commercial banks, co-operative banks, non-banking financial companies (NBFCs), and housing finance firms will be allowed to extend loans against silver ornaments and coins. However, loans against primary bullion silver or gold and financial instruments backed by bullion, such as ETFs or mutual funds, remain prohibited due to regulatory concerns.
Eligibility and Pledge Limits
Borrowers will be able to pledge up to 10 kilograms of silver ornaments and 500 grams of silver coins to obtain loans. For gold, the limits are 1 kilogram for ornaments and 50 grams for coins.
The RBI has also set Loan-to-Value (LTV) ratios for gold and silver loans:
- Up to ₹2.5 lakh: 85% LTV
- ₹2.5–5 lakh: 80% LTV
- Above ₹5 lakh: 75% LTV
Valuation and Transparency Rules
To ensure fairness, silver and gold will be valued at the lower of the 30-day average or the previous day’s closing price published by IBJA or a SEBI-regulated commodity exchange. Only the intrinsic metal value will be considered — gemstones and other elements will be excluded.
Borrowers must be present during testing, receive a valuation certificate, and be provided with loan documents in their preferred or local language.
Collateral Management and Consumer Protection
Collateral must be stored in secured vaults, handled only by authorized bank employees. Surprise audits and regular verifications are mandatory. Lenders must return pledged collateral within seven working days after full repayment. Delays beyond this period will attract a compensation of ₹5,000 per day to the borrower.
In case of loan default, lenders may auction pledged silver or gold, but only after notifying borrowers. The reserve price must be at least 90% of the current market value, or 85% if auctions fail twice.
A Step Toward Greater Financial Inclusion
The inclusion of silver in secured lending frameworks will help small borrowers and artisans access affordable short-term credit. By introducing uniform valuation and management standards, the RBI aims to improve transparency, consumer protection, and liquidity in the precious metals loan segment.
