Is It Possible to Get a Loan Against Silver? Important Information for Borrowers Regarding RBI’s New Rules
Under the RBI’s new standardized lending criteria, which all regulated lenders must adhere to starting on April 1, 2026, silver will soon join gold as an approved collateral for loans. The Reserve Bank of India (RBI) has released guidelines for lending practices in gold and silver loans for banks and non-banking financial institutions (NBFCs) in an effort to standardize and regularize loans against bullions like gold and silver.
The June 6 announcement of the changes aims to improve lender accountability, transparency, and borrower protection for commercial banks, NBFCs, cooperative banks, and home finance firms.
For short-term requirements, the RBI permits financing secured by gold and silver coins, jewelry, or decorations. To curb speculation, loans secured by primary gold or silver-like bullion are prohibited.
However, already promised gold or silver cannot be used for lending or re-pledging. They are also unable to borrow money to purchase gold, silver, or gold-backed assets (such as exchange-traded funds, or ETFs).
LTV Increase for Small Loans
Up from 75%, borrowers may now get up to 85% of the gold’s worth as a loan. The whole loan amount, up to Rs 2.5 lakh, including interest, is subject to this Loan-to-Value (LTV) restriction. For instance, you may now borrow up to Rs 85,000 if your gold is worth Rs 1 lakh.
12-Month Maximum for Loans with Bullet Repayment
Loans with bullet payback, in which principle and interest are paid concurrently at the end, are now required to be paid back within a year.
Limits on the Amounts of Gold and Silver That Borrowers May Pledge:
- 1 kilogram of gold jewelry
- 50-gram gold coins
- Silver coins up to 500 grams; silver jewelry up to 10 kilogram
- All lending branches are subject to these limitations per borrower.
Quicker Return of Promised Goods
Pledged gold or silver must be returned by lenders within seven business days of the loan closing. They have to compensate the borrower with Rs 5,000 each day if they are late.
Required Payment for Damage or Loss
Lenders are required to reimburse borrowers in full if pledged gold or silver is misplaced or damaged during audits or handling.
Clear Auction Procedure in the Event of Loan Defaults:
Before gold is put up for auction, lenders must provide adequate warning.
At least 90% of the market value (85% after two unsuccessful auctions) must be the reserve price.
The borrower must get any excess items from the auction back within seven business days.
Unambiguous Local Language Communication
The borrower’s preferred or local language must be used for all loan conditions and valuation information. These facts must be disclosed to illiterate borrowers in front of an impartial witness.