Can You Take A Loan Against Silver? What Borrowers Should Know About RBI’s New Guidelines

Silver will soon join gold as an accepted collateral for loans under the RBI’s new standardized lending guidelines, which all regulated lenders must follow from April 1, 2026. In an attempt to regularize and standardize loans against bullions such as gold and silver, the Reserve Bank of India (RBI) has issued guidelines of lending practices in gold and silver loan for banks and non-banking financial companies (NBFCs).

The reforms, announced on June 6, aim to enhance borrower protection, transparency, and lender accountability across commercial banks, NBFCs, cooperative banks, and housing finance companies.

RBI allows lending against gold and silver jewellery, ornaments or coins to meet short-term needs. However, loans against primary gold or sliver

like bullion are not allowed to prevent speculation.

However, one can’t re-pledge or lend using already pledged gold/silver. Moreover, they can’t take loans for buying gold, silver or gold-backed securities (like ETFs).

Higher LTV for Small Loans

Borrowers can now get up to 85% of the gold value as a loan, up from 75%. This Loan-to-Value (LTV) cap applies to total loan amounts up to Rs 2.5 lakh, including interest. For example, if your gold is worth Rs 1 lakh, you can now borrow up to Rs 85,000.

12-Month Limit for Bullet Repayment Loans

Bullet repayment loans—where interest and principal are paid together at the end—must now be repaid within 12 months.

Limits on Gold and Silver Pledged

Borrowers can pledge:

• Gold ornaments up to 1 kg
• Gold coins up to 50 grams
• Silver ornaments up to 10 kg
• Silver coins up to 500 grams

These limits apply per borrower across all lender branches.

Faster Return of Pledged Items

Lenders must return pledged gold or silver on the same day the loan is closed, or within 7 working days. If delayed, they must pay Rs 5,000 per day in compensation to the borrower.

Mandatory Compensation for Loss or Damage

If pledged gold or silver is lost or damaged during audits or handling, lenders must fully compensate borrowers.

Transparent Auction Process

In case of loan defaults:

• Lenders must issue proper notice before auctioning gold.
• The reserve price must be at least 90% of the market value (85% after two failed auctions).
• Any surplus from the auction must be returned to the borrower within 7 working days.

Clear Communication in Local Language

All loan terms and valuation details must be provided in the borrower’s preferred or regional language. For illiterate borrowers, these details must be shared in the presence of an independent witness.