Loan on Silver: Not Just Gold — RBI Allows Loans on Silver Too! Big Move for Borrowers

The Reserve Bank of India (RBI) has announced a major policy change, allowing citizens to take loans not only against gold but also against silver. Under the new “Reserve Bank of India Directions 2025,” banks, NBFCs, and cooperative banks will be permitted to lend money against silver jewellery and coins.
These new rules will come into effect across India from April 1, 2026.

Who Can Offer Loans Against Silver?

According to RBI’s guidelines, the following institutions can now lend against gold and silver:

• Commercial Banks (including Small Finance Banks and Regional Rural Banks)

• Urban and Rural Cooperative Banks

• Non-Banking Financial Companies (NBFCs)

• Housing Finance Companies

Eligible Forms of Gold and Silver

RBI has clarified that loans will be provided only against jewellery or coins made of gold or silver.
No loans will be sanctioned against Gold ETFs, mutual fund units, or other paper-based instruments.

Weight Limits for Loan Collateral

• Gold jewellery: up to 1 kg

• Silver jewellery: up to 10 kg

• Gold coins: up to 50 grams

• Silver coins: up to 500 grams

Items exceeding these weight limits will not be accepted as collateral.

Loan Value

If you have silver worth ₹1 lakh, you can get a loan of up to ₹85,000, based on the loan-to-value (LTV) ratio of 85%.

How Will the Value Be Calculated?

The value of gold or silver will be determined based on:

• The average closing price of the past 30 days or

• The previous day’s closing price, whichever is lower.

These rates will be taken from the India Bullion and Jewellers Association (IBJA) or recognized commodity exchanges.
Note: The value of stones or other materials in the jewellery will not be included.

Loan Process

1. The bank or NBFC will inspect and verify the jewellery or silver.

2. An official valuation report will be issued.

3. The loan agreement will include details about fees, repayment terms, and auction conditions.

4. All documents will be provided in the local language or the customer’s preferred language.

5. The pledged gold or silver will be kept safely in a secured bank locker and audited regularly.

When Will You Get Your Silver Back?

Once the full loan is repaid, the bank must return the pledged items within 7 days.
If the bank delays, it must pay a penalty of ₹5,000 per day to the customer.

If You Fail to Repay the Loan

If the borrower fails to repay:

• The bank can auction the pledged silver or gold.

• A written notice will be sent before the auction.

• If the borrower cannot be contacted, a public notice will be issued with a one-month grace period.

• The reserve price for auctioned items cannot be below 90% of the market value.

• If the customer doesn’t claim their items even after 2 years of full repayment, the bank may mark them as “Unclaimed Collateral” and attempt to contact the borrower or their legal heirs.