You might have often seen advertisements about a loan against gold, where a couple pledges the yellow metal to get cash from the bank cashier. But there are zero chances that you have watched a similar jingle about a loan against silver. But things are about to change. The Reserve Bank of India (RBI) has come up with a circular titled “Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025”, which comprises comprehensive guidelines that are all set to come into effect from April 1, 2026, which will make taking loan against silver easier.
Lenders that will offer silver and gold loan as per new RBI norms
Who is eligible to take a loan against silver?
The Reserve Bank of India said that it has restricted lending against primary (bullion) silver and gold due to broader macro-prudential concerns.
However, the lenders are permitted to lend against the collateral security of gold jewellery, ornaments and coins for meeting the short-term financing needs of borrowers.
Which form of gold or silver won’t fetch you a loan
A lender can't grant any advance or loan against primary (bullion) gold or silver or financial assets backed by primary gold or silver, e.g., units of Exchange-traded funds (ETFs) or units of Mutual Funds.
A lender can't extend a loan where the ownership of the collateral is doubtful.
A lender can't avail loans by re-pledging gold or silver pledged to it by its borrowers.
It can't extend loans to other lenders, entities or individuals by accepting gold or silver collateral pledged to such lenders, entities or individuals by their borrowers as collateral.
The RBI also says that the tenor of consumption loans in the nature of bullet repayment loans should be capped at 12 months.
What are the limits for gold/silver ornaments as pledge?
The circular says that the aggregate weight of ornaments pledged for all loans to a borrower shall not exceed 1 kilogram for gold ornaments and 10 kilograms for silver ornaments.
(ii) The aggregate weight of coin(s) pledged for all loans to a borrower shall not exceed 50 grams in case of gold coins and 500 grams in case of silver coins.
Gold ornaments ≤ 1 kg
Silver ornaments ≤ 10 kg
Gold coins ≤ 50 g
Silver coins ≤ 500 g
What are loan-to-value (LTV) ratios for gold and silver loans?
Loan-to-value ratio is the money one can borrow against their pledged silver and gold. It shows how much loan you can get against every Rs 100 worth of precious metal.
The LTV ratio for different amounts are as follows-
Loan Amount Maximum LTV
≤ ₹2.5 lakh 85%
₹2.5–5 lakh 80%
> ₹5 lakh 75%
What are the valuation rules for gold and silver pledged for a loan?
For this purpose, the valuation of silver or gold will be the lower of
(a) the average closing price for gold or silver of that specific purity over the preceding 30 days, or
(b) the closing price for gold or silver of that specific purity on the preceding day, as published either by the India Bullion and Jewellers Association Ltd (IBJA) or by a commodity exchange regulated by the Securities and Exchange Board of India (SEBI).
The RBI states that for the purpose of the valuation of gold and silver, only their respective intrinsic value contained in the eligible collateral shall be reckoned, and no other cost elements, such as precious stones or gems, shall be added.
Standardisation and transparency for valuation of metal
The RBI has set uniform procedures for assaying and valuation across branches.
A borrower must be present during the testing of silver or gold for pledging at a branch. After that, a valuation certificate will be provided to the borrower.
The loan agreement must clearly specify all fees, the auction process, and refund timelines.
All communication related to the loan must be in the local language or the borrower’s preferred language.
Conditions related to collateral management
Collateral will be handled only by the lender’s employees in secured vaults.
There are surprise audits and periodic verifications mandated.
Collateral must be released within 7 working days after a full repayment.
Conditions for releasing collateral after repayment of loan
The RBI circular says a lender shall release or return the pledged eligible collateral held as security to the borrower(s)/ legal heir(s) on the same day, but in any case, not exceeding a maximum period of seven working days upon the full repayment or the settlement of the loan.
At the time of release of pledged eligible collateral to the borrower(s)/legal heir(s), the collateral should be verified for correctness as per details in the certificates to the borrowers’ satisfaction.
What if the borrower fails to repay his gold/silver loan?
If the borrower fails to repay his loan, the lender can auction their collateral. The following conditions will govern the auction-
The lender should give prior notice to the borrower before starting auctioning.
If the borrower is untraceable, the borrower should issue a public notice first and then wait for a month before starting the auctioning of the pledged silver/gold.
The lender should declare a reserve price for the gold and silver collateral at the time of auction, which can't be less than 90 per cent of its current value.
If auctions fail twice, a reserve price not less than 85 per cent of its current value shall be adopted.
Compensation to borrower if lender delays release of pledged collateral
In case of delay in release of the pledged collateral after the full repayment or the settlement of the loan by the borrower, where reasons for delay are attributable to the lender, the lender will compensate the borrower(s)/legal heir(s) at the rate of Rs 5,000 for each day of delay beyond the timeline.
Rules for unclaimed gold and silver collateral with lender
Pledged gold or silver collateral lying with a lender beyond two years from the date of the full repayment or the settlement of the loan shall be treated as unclaimed. In such a case, a lender should periodically undertake special drives to ascertain the whereabouts of the borrower(s)/legal heir(s) in respect of such unclaimed gold and silver collateral.
Lenders that will offer silver and gold loan as per new RBI norms
- Commercial banks (including small finance and regional rural banks)
- Urban and rural co-operative banks
- NBFCs and housing finance companies
Who is eligible to take a loan against silver?
The Reserve Bank of India said that it has restricted lending against primary (bullion) silver and gold due to broader macro-prudential concerns.
However, the lenders are permitted to lend against the collateral security of gold jewellery, ornaments and coins for meeting the short-term financing needs of borrowers.
Which form of gold or silver won’t fetch you a loan
A lender can't grant any advance or loan against primary (bullion) gold or silver or financial assets backed by primary gold or silver, e.g., units of Exchange-traded funds (ETFs) or units of Mutual Funds.
A lender can't extend a loan where the ownership of the collateral is doubtful.
A lender can't avail loans by re-pledging gold or silver pledged to it by its borrowers.
It can't extend loans to other lenders, entities or individuals by accepting gold or silver collateral pledged to such lenders, entities or individuals by their borrowers as collateral.
The RBI also says that the tenor of consumption loans in the nature of bullet repayment loans should be capped at 12 months.
What are the limits for gold/silver ornaments as pledge?
The circular says that the aggregate weight of ornaments pledged for all loans to a borrower shall not exceed 1 kilogram for gold ornaments and 10 kilograms for silver ornaments.
(ii) The aggregate weight of coin(s) pledged for all loans to a borrower shall not exceed 50 grams in case of gold coins and 500 grams in case of silver coins.
Gold ornaments ≤ 1 kg
Silver ornaments ≤ 10 kg
Gold coins ≤ 50 g
Silver coins ≤ 500 g
What are loan-to-value (LTV) ratios for gold and silver loans?
Loan-to-value ratio is the money one can borrow against their pledged silver and gold. It shows how much loan you can get against every Rs 100 worth of precious metal.
The LTV ratio for different amounts are as follows-
Loan Amount Maximum LTV
≤ ₹2.5 lakh 85%
₹2.5–5 lakh 80%
> ₹5 lakh 75%
What are the valuation rules for gold and silver pledged for a loan?
For this purpose, the valuation of silver or gold will be the lower of
(a) the average closing price for gold or silver of that specific purity over the preceding 30 days, or
(b) the closing price for gold or silver of that specific purity on the preceding day, as published either by the India Bullion and Jewellers Association Ltd (IBJA) or by a commodity exchange regulated by the Securities and Exchange Board of India (SEBI).
The RBI states that for the purpose of the valuation of gold and silver, only their respective intrinsic value contained in the eligible collateral shall be reckoned, and no other cost elements, such as precious stones or gems, shall be added.
Standardisation and transparency for valuation of metal
The RBI has set uniform procedures for assaying and valuation across branches.
A borrower must be present during the testing of silver or gold for pledging at a branch. After that, a valuation certificate will be provided to the borrower.
The loan agreement must clearly specify all fees, the auction process, and refund timelines.
All communication related to the loan must be in the local language or the borrower’s preferred language.
Conditions related to collateral management
Collateral will be handled only by the lender’s employees in secured vaults.
There are surprise audits and periodic verifications mandated.
Collateral must be released within 7 working days after a full repayment.
Conditions for releasing collateral after repayment of loan
The RBI circular says a lender shall release or return the pledged eligible collateral held as security to the borrower(s)/ legal heir(s) on the same day, but in any case, not exceeding a maximum period of seven working days upon the full repayment or the settlement of the loan.
At the time of release of pledged eligible collateral to the borrower(s)/legal heir(s), the collateral should be verified for correctness as per details in the certificates to the borrowers’ satisfaction.
What if the borrower fails to repay his gold/silver loan?
If the borrower fails to repay his loan, the lender can auction their collateral. The following conditions will govern the auction-
The lender should give prior notice to the borrower before starting auctioning.
If the borrower is untraceable, the borrower should issue a public notice first and then wait for a month before starting the auctioning of the pledged silver/gold.
The lender should declare a reserve price for the gold and silver collateral at the time of auction, which can't be less than 90 per cent of its current value.
If auctions fail twice, a reserve price not less than 85 per cent of its current value shall be adopted.
Compensation to borrower if lender delays release of pledged collateral
In case of delay in release of the pledged collateral after the full repayment or the settlement of the loan by the borrower, where reasons for delay are attributable to the lender, the lender will compensate the borrower(s)/legal heir(s) at the rate of Rs 5,000 for each day of delay beyond the timeline.
Rules for unclaimed gold and silver collateral with lender
Pledged gold or silver collateral lying with a lender beyond two years from the date of the full repayment or the settlement of the loan shall be treated as unclaimed. In such a case, a lender should periodically undertake special drives to ascertain the whereabouts of the borrower(s)/legal heir(s) in respect of such unclaimed gold and silver collateral.
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