RBI's New Initiative: Loans Against Silver Jewellery

RBI Introduces Loans Against Silver Jewellery for the First Time

For the first time in India’s financial history, the Reserve Bank of India (RBI) has allowed loans against silver jewellery and coins, expanding the collateral base beyond gold. The new regulatory framework, titled RBI (Gold and Silver Loans) Directions, 2025, will come into effect on April 1, 2026. This move marks a major reform in India’s precious metal lending ecosystem, providing new credit opportunities to millions of households that hold silver as a traditional form of wealth.

Main Features

1. New Inclusion

This is the first-ever inclusion of silver as an acceptable collateral under RBI-regulated loans. Borrowers can now obtain loans by pledging silver jewellery or coins with banks and non-bank financial institutions (NBFCs). However, bullion or financial assets such as exchange-traded funds (ETFs) and mutual funds will continue to remain excluded.

2. Eligible Institutions

All commercial banks, small finance banks, regional rural banks, cooperative banks, and registered NBFCs will be eligible to offer loans under this new framework.

3. Loan-to-Value (LTV) Ratios

The RBI has set different LTV limits to ensure responsible and risk-based lending:

• Up to 85% for loans up to ₹2.5 lakh
• Up to 80% for loans between ₹2.5–₹5 lakh
• Up to 75% for loans above ₹5 lakh

The valuation of silver will be based on the 30-day average price or the previous day’s closing price provided by the India Bullion and Jewellers Association (IBJA) or any other recognised commodity exchange.

4. Collateral Limits

The RBI has prescribed clear weight-based limits for eligible collateral:

• Silver jewellery: up to 10 kilograms
• Silver coins: up to 500 grams
• Gold jewellery: capped at 1 kilogram
• Gold coins: limited to 50 grams

5. Transparency and Consumer Protection

The RBI has placed strong emphasis on consumer rights and process transparency. Pledged items must be returned within seven working days after the borrower repays the loan in full. Any delay in return will attract a penalty of ₹5,000 per week. The framework aims to promote fairness, ensure standardisation, and build public confidence in the regulated precious metal loan market.

6. Economic Significance

This initiative holds substantial importance for financial inclusion and rural credit access. By recognising silver as a valid form of collateral, the RBI seeks to unlock the economic potential of assets that are traditionally held idle in households.

• Promotes financial inclusion by enabling silver-owning households to access formal credit.
• Reduces dependence on informal moneylenders in rural and semi-urban areas.
• Encourages productive use of silver assets for purposes like education, small businesses, and emergencies.

Overall, the inclusion of silver in collateral-based lending marks a significant step toward formalising India’s precious metal economy and expanding access to affordable credit for millions of citizens.