RBI Expands Loan Options: Now You Can Get Loans Against Silver Jewellery and Coins Too

In a major financial reform aimed at widening access to secured loans, the Reserve Bank of India (RBI) has announced that individuals can now avail of loans not just against gold, but also against silver. The move, part of the Reserve Bank of India Directions 2025, lays down comprehensive guidelines for lending institutions to accept silver jewellery and coins as collateral. The new rules will officially come into effect from April 1, 2026.

Loans Against Silver Now Officially Approved

Until now, banks and finance companies were permitted to offer loans only against gold. However, under the new RBI guidelines, silver jewellery and coins held by individuals can also be pledged to obtain loans. This is expected to benefit households across India, where silver is commonly held in the form of ornaments and coins, providing them with a new source of liquidity.

Who Can Offer These Loans?

The following financial institutions have been authorized by the RBI to extend loans against gold and silver:

• Commercial Banks (including Small Finance and Regional Rural Banks)

• Urban and Rural Cooperative Banks

• Non-Banking Financial Companies (NBFCs)

• Housing Finance Companies

These institutions must follow RBI’s updated regulations to ensure transparency and borrower protection.

Eligible Collateral: What You Can Pledge

The RBI has specified clear limits on the type and quantity of gold and silver that can be pledged:

• Gold jewellery: Up to 1 kilogram

• Silver jewellery: Up to 10 kilograms

• Gold coins: Up to 50 grams

• Silver coins: Up to 500 grams

Loans will not be granted against bullion, silver or gold bars, or financial instruments like Gold ETFs and mutual fund units.

Loan-to-Value (LTV) Ratios

RBI has defined the maximum Loan-to-Value (LTV) ratios for various loan amounts to maintain stability in lending:

• For loans up to ₹2.5 lakh – up to 85% of the asset value

• For loans between ₹2.5 lakh and ₹5 lakh – up to 80%

• For loans above ₹5 lakh – up to 75%

For example, if your silver ornaments are valued at ₹1 lakh, you can get a loan of up to ₹85,000.

How the Valuation Will Be Done

Banks and NBFCs will determine the value of gold or silver based on:

• The lower of the 30-day average closing price or the previous day’s closing price.

• The valuation must rely on official prices published by the India Bullion and Jewellers Association (IBJA) or a recognized commodity exchange.

• The value of any stones or non-metal parts in jewellery will not be included in the valuation.

Transparent Loan Procedures

All loan-related documentation must be provided in the local or preferred language of the borrower. The RBI mandates that valuation should be conducted in the borrower’s presence, and a certified valuation report must be issued.

The loan agreement will clearly mention:

• All fees and charges

• Auction procedures (in case of default)

• Timelines for refund and return of pledged items

Once pledged, the jewellery or coins will be securely stored in the bank’s vaults under strict supervision, with regular audits and inspections to ensure safety.

Return of Pledged Items

After full repayment of the loan, banks are required to return the pledged gold or silver within 7 working days. If there is a delay on the bank’s part, the customer is entitled to a compensation of ₹5,000 per day.

What Happens If You Don’t Repay the Loan?

If a borrower fails to repay on time, the bank is authorized to auction the pledged silver or gold. The RBI has laid out strict procedures for this:

• A prior auction notice must be sent to the borrower.

• If the borrower cannot be reached, a public notice will be issued, allowing at least one month’s time.

• The reserve price for the auction cannot be less than 90% of the current market value.

• If two consecutive auctions fail, the reserve price can be reduced to 85%.

Unclaimed Jewellery After Two Years

If a borrower fails to claim their gold or silver even two years after repaying the loan, banks will classify it as “unclaimed collateral.” In such cases, they must make active efforts to contact the borrower or their legal heirs through special outreach campaigns.

A Big Boost to Rural and Middle-Class Households

This policy change is expected to have a major impact, particularly for rural and middle-income families, where silver jewellery and coins are commonly owned but often remain idle. By allowing loans against silver, the RBI has opened up an additional credit channel that can support small businesses, farmers, and households during financial emergencies.

With these new directions, the RBI continues its mission to make credit access easier, fairer, and more inclusive for every Indian household.