The Reserve Bank of India has introduced a major regulatory update through its new silver loan guidelines, creating an additional borrowing option for citizens. After easing gold-loan norms earlier, the central bank has now expanded the framework to include silver jewellery and coins as acceptable collateral. These rules come into effect on April 1, 2026, and aim to improve transparency, lending discipline, and customer protection across the precious-metal loan market.
Although lenders already run large gold-loan portfolios, this structured approach to silver-backed lending marks a significant shift. The RBI wants banks and non-banks to follow uniform procedures so borrowers receive fair value and timely service. As demand for small-ticket secured loans grows, the move strengthens financial inclusion while lowering credit risks for lenders.
Scope of the Silver Loan Guidelines
The new directions apply to commercial banks, small finance banks, regional rural banks, cooperative banks, non-banking financial companies, and housing finance companies. The RBI allows loans only against silver or gold jewellery and coins, not bullion. Therefore, borrowers cannot pledge bars, ingots, exchange-traded funds, or mutual fund units linked to precious metals.
To maintain discipline, the central bank has set clear limits. Lenders can accept up to 10 kg of silver jewellery and 500 grams of silver coins. On the gold side, they may take up to 1 kg of jewellery and 50 grams of gold coins. These caps prevent large speculative transactions while keeping the scheme focused on household borrowers.
How Lenders Will Value Silver and Gold
Because valuation can vary sharply, the guidelines define a standardized method. Lenders must calculate the eligible value based on the average closing price of the last 30 days or the previous day’s closing price, choosing the lower of the two. They must rely on rates published by the India Bullion and Jewellers Association (IBJA) or any recognized commodity exchange.
Importantly, only the precious-metal content counts. Stones, beads, and other non-metal embellishments hold no value in the assessment. This prevents inflated appraisals and ensures fair loan-to-value (LTV) calculations.
Loan-to-Value Ratios Under the New Rules
The RBI has set maximum LTV caps according to loan size. Borrowers can receive:
- Up to 85% LTV for loans up to ₹2.5 lakh
- Up to 80% LTV for loans between ₹2.5 lakh and ₹5 lakh
- Up to 75% LTV for loans above ₹5 lakh
This tiered structure balances accessibility with risk. For instance, if silver is worth ₹1 lakh, the maximum loan available is ₹85,000, assuming the amount falls under the lowest slab.
Stronger Customer Protection Measures
The RBI also emphasizes service quality. Once borrowers repay or settle their loans, lenders must return pledged jewellery within seven working days. If delays occur due to the lender’s fault, the customer must receive ₹5,000 per day as compensation. This rule discourages mismanagement and protects borrowers from unnecessary stress.
Also Read: UIDAI Launches New Aadhaar App to Access Aadhaar Details
Additionally, the guidelines enhance transparency across documentation, storage, and auction processes. Borrowers must receive clear disclosures regarding valuation, repayment, and potential sale of collateral during defaults.
What the New Framework Means for Borrowers
These silver loan guidelines broaden access to secured credit at a time when household borrowing is rising. Since silver is more affordable than gold, many families hold larger quantities of silver ornaments, making the new system particularly useful for middle-income and rural households.
Moreover, because the valuation and LTV process now follows a uniform formula, borrowers can compare loan products more easily. Transparent rules also reduce the risk of disputes and ensure predictable borrowing terms.