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Loan on Silver:RBI Allow from April 2026
The RBI has introduced new rules allowing banks and NBFCs to offer loans against silver ornaments and coins from April 2026, with strict valuation and collateral guidelines. Borrowers can get up to 85% of silver’s value for loans below ₹2.5 lakh.
Author: Meera
Published: 2 hours ago
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The Reserve Bank of India (RBI) has issued new guidelines allowing banks and NBFCs to offer loans against silver under the Lending Against Gold and Silver Collateral Directions, 2025. The rules, effective from 1 April 2026, will let borrowers pledge silver ornaments and coins for loans, with up to 85% of silver’s value allowed for loans below ₹2.5 lakh, ensuring safe and transparent collateral management.The Economic Times reported.
Under the new framework, commercial banks, co-operative banks, housing finance companies, small finance banks, and regional rural banks can extend loans by accepting silver ornaments and coins as collateral. The move aims to enhance access to credit for households and small borrowers who hold silver assets but previously lacked formal lending avenues for them.
However, the RBI has clearly restricted lending against primary (bullion) silver and silver-backed financial instruments, such as exchange-traded funds (ETFs) and mutual fund units. This restriction is meant to prevent speculative lending and ensure loans are used for genuine financial needs.
The circular specifies the maximum quantity of collateral a borrower can pledge: up to 10 kilograms of silver ornaments and 500 grams of silver coins. For gold, the limits remain at 1 kilogram for ornaments and 50 grams for coins.
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The loan-to-value (LTV) ratio, which determines how much loan can be availed against the pledged metal, will depend on the loan amount. Borrowers can get up to 85% of the silver’s value for loans up to ₹2.5 lakh, 80% for loans between ₹2.5 lakh and ₹5 lakh, and 75% for loans above ₹5 lakh.
The RBI has also laid down clear rules for valuation and collateral management. The valuation will be based on the lower of the 30-day average price or the previous day’s closing price of silver, as published by the India Bullion and Jewellers Association (IBJA) or a SEBI-recognised commodity exchange.
To ensure transparency, borrowers must be present during the testing of pledged items, and valuation certificates must be issued. Lenders must release pledged collateral within seven working days after full repayment, failing which they must compensate borrowers ₹5,000 per day of delay.
The RBI’s new framework establishes a uniform and transparent process for silver-backed loans, aiming to protect borrowers while expanding formal credit access across India.
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