Starting April 01, 2026, people will be allowed to take loans against silver like gold under the RBI’s new standardized lending guidelines.
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 sliver like bullion are not allowed to prevent speculation.
This is especially valuable for low-income households and small businesses, particularly those in rural India, where silver has great cultural and economic importance, says Mukesh Pandey, Director of Rupyaa Paisa.
“It lowers the barrier to entry for credit, as owning silver is more affordable than owning gold, allowing a greater borrower base to leverage household assets during emergencies or for working capital,” Pandey adds.
How Will Silver Borrowing Differ From Loan Borrowing?
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.
Pandey adds that silver loans may differ from gold loans in the loan-to-value ratio and interest rates. “Since silver prices are more volatile with lower liquidity, this might ensure rather cautious lending caps and slightly higher rates in credit backed by it, compared to that of gold,” he explains.
What Should Borrowers Need To Know?
The borrowers need to look into the purity assessment techniques, storage and insurance charges, the repayment schedule, and the foreclosure terms. Again, daily price fluctuation, credibility of the lender, final cost of borrowing, and not just the loan amount, will also be important to consider.
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.
