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The RBI has expanded its lending architecture to include silver as collateral for loans in its latest guidelines. The apex bank has issued new rules under the ‘Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025’, which will officially take effect from April 1, 2026.
The move permits individuals to borrow against silver ornaments and coins, extending the benefits of the widely popular gold loan system to another precious metal.
The facility will be accessible via a network of financial institutions, including commercial banks, small finance banks, regional rural banks, cooperative banks, and non-banking financial companies (NBFCs), as well as housing finance companies.
However, the Reserve Bank of India has imposed a restriction that silver bullion (in the form of bars or bricks) and financial assets, such as silver ETFs or mutual fund units, cannot be accepted as collateral for loans. This restriction aims to curb speculative exposure and promote financial discipline in metal-based lending.
The move allows borrowers to pledge up to 10 kg of ornaments and 500 grams of silver coins. In the case of gold, the maximum limit is retained at 1 kg of ornaments and 50 grams for coins.
These limits collectively apply to the total amount a borrower can have outstanding, so that the system remains transparent and traceable.
The central bank has set a tiered LTV ratio, determining how much of a loan can be sanctioned against the pledged silver.
Up to Rs 2.5 lakh: 85% LTV
Rs 2.5 lakh - 5 lakh: 80% LTV
Above Rs 5 lakh: 75% LTV
For example, a silver worth Rs. 1 lakh will bear a loan of Rs. 85,000, depending on the loan bracket.
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The price of silver, therefore, is determined based on the lower of two values: the average of the last 30 days’ closing prices and the immediately previous day’s price, published by the India Bullion and Jewellers Association (IBJA) or a SEBI-recognized exchange. The value of silver will be determined only by the intrinsic value of the base metal, excluding gems or decorative components.
Once the borrower has fully repaid the amount, the lender must return the pledged silver within seven working days. Additionally, it will incur a fine of Rs 5,000 per day.
In the event of default, the lender can auction the silver after issuing prior notice and setting a reserve price of at least 90% of the current market value.
Gold loans have traditionally been a source of instant credit in India. By extending the facility to silver, the RBI is attempting to widen access to formal credit, reduce dependence on unregulated pawn shops, and increase transparency in collateral-based lending. This move could perhaps open a new avenue for short-term financing for millions of households and make the so-called ‘white metal’ as reliable a financial asset as gold.
