MUMBAI: After liberalizing the popular gold loan regulations recently, the Reserve Bank has now opened up a new avenue for the public to borrow by letting them pledge silver jewellery or coins to banks and non-banks. The new regulations will take effect from April 1, 2026.
A new set of guidelines outlining the procedures for taking silver as collateral for loans has been released by the central bank under the Reserve Bank of India (gold and silver loans) directions, 2025). The new guidelines improve oversight, uniformity, and transparency in the precious metal loan market.
The new norms apply to commercial banks (including small finance and regional rural ranks), urban and rural cooperative banks, non-banking finance companies 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 or coins. Loans will not be available against bullion--pure gold or silver ingots or their associated financial assets such as gold ETFs or mutual fund units.
The central bank has also capped the pledging of gold jewellery up to 1 kg and silver jewellery up to 10 kg; gold coins up to 50 grams and silver coins up to 500 grams.
The RBI has also fixed the maximum limit of loan-to-value (LTV) at up to 85% on loans up to Rs 2.5 lakh, up to 80% on loans from Rs 2.5 to Rs 5 lakh and 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.
The lenders will arrive at the LTV or price of gold or silver, based on the average closing price of the past 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) or any recognized commodity exchange. The value of stones or other metals in jewellery will not be added.
The RBI has also said the pledged jewellery will be returned within seven 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 be compensated at the rate of Rs 5,000 per day.