The Reserve Bank of India (RBI) has opened up a new avenue for borrowers by allowing loans against silver, in addition to gold. This means individuals can now pledge silver jewellery or coins to avail loans from banks and non-banking finance companies (NBFCs).
A new set of guidelines outlining the procedures for taking gold and silver as collateral has been released by the central bank under the Reserve Bank of India (Gold and Silver (Loans) Directions, 2025). The purpose of these guidelines is to improve oversight, uniformity, and transparency in the precious metal loan market.
The new regulations will take effect on April 1, 2026.
Who can extend loan against silver?
- Commercial Banks (including Small Finance and Regional Rural Banks)
- Urban and Rural Co-operative Bank
- NBFCs and Housing Finance Companies
The RBI has made it clear that loans can be given only on silver or gold kept in the form of jewellery, jewellery or coins. Loans will not be available against bullion i. e. pure gold or silver ingots or their associated financial assets such as gold ETFs or mutual fund units.
What jewellery or coins can be pledged?
- Gold jewelry - up to a maximum of 1 kg
- Silver jewelry - up to a maximum of 10 kg
- Gold coins - up to 50 grams
- Silver coins - up to 500 grams
Loans cannot be taken on jewellery or coins weighing more than this limit.
How much loan will you get? (Loan-to-value ratio)
The RBI has also fixed the maximum limit of loan-to-value (LTV).
- Up to 85% on loans up to Rs 2.5 lakh
- Up to 80% on loans from Rs 2.5 to Rs 5 lakh
- Up to 75% on loans above Rs 5 lakh
This means that if you have silver worth Rs 1 lakh, you can get a maximum loan of up to Rs 85,000 on it.
How will the evaluation be done?
To determine the price of gold or silver, banks or NBFCs will consider the average closing price of the last 30 days or the closing price of the previous day, whichever is lower. This price will be based on the issue rate of IBJA (India Bullion and Jewellers Association Ltd) or any recognized commodity exchange. The value of stones or other metals in jewellery will not be added.
How to get a loan
The jewellery or silver will be checked in the presence of the person taking the loan. The bank will give a certified report of the valuation. In the loan agreement, all the fees, the auction process and the deadline for the refund will be clearly written. All documents and information will be provided in the local language or the customer's preferred language. The pledged silver or gold will be kept in a safe vault of the bank, which can only be handled by authorised personnel. Inspections and inspections will be carried out from time to time.
Timely return of pledged jewellery made mandatory
As per RBI rules, the pledged jewellery or silver will be returned to the bank within 7 working days after the loan is fully repaid or settled. If the delay is due to the fault of the bank, the customer will have to pay compensation at the rate of Rs 5,000 per day.
What happens if the loan is not repaid?
If the borrower does not repay the loan on time, the bank can auction his/her jewellery or silver.The bank will first serve a notice of auction to the customer. If the customer is not in touch, a month's time will be given by issuing a public notice. The reserve price of the auction cannot be less than 90% of the current price. If the auction fails twice, the reserve price can be reduced by up to 85%.
Unclaimed gold or silver to be traced through special campaigns
If a customer does not take his gold or silver even after two years of repaying the loan, the bank will declare him as unclaimed collateral and will run a special campaign to contact the customer or his heirs.
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