RBI Releases Fresh Guidelines On Loans Against Silver

• 12 Nov 2025
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On 11 November 2025, the Reserve Bank of India made a much-needed amendment in the regulatory framework for inclusion of loans against silver jewellery as well as silver coins. It introduced new guidelines under the Reserve Bank of India Gold and Silver Loans Directions 2025 aimed at broadening collateral lending opportunities. These guidelines are set to be implemented starting from 1 April 2026.

In India, loans secured by precious metals are primarily focused on gold. However, once new regulations come into effect, the banks, non-banking financial companies, urban and rural co-operative banks and housing finance companies will be able to provide loans against silver jewellery (up to a maximum of 10 kg) and silver coins (up to 500 g). 

For comparison, under the same regulations, individuals can pledge gold jewellery (only) up to 1 kg and gold coins (only) up to 50 g.

Why Did RBI Make This Move?

The central bank aims to expand the scope of its regulations to improve oversight, uniformity and transparency in the operations of the loan market related to precious metals. There are three main reasons for this initiative by the RBI. The first reason is that, by codifying lending practices for silver, the central bank is working to create a more standardized playing field in what has previously been a fragmented market. 

Second, the acceptable types of collateral are specified as silver jewelry as well as coins with clearly defined methods for valuation and loan to value ratios. The third reason is that this initiative is part of central bank and Indian government’s broader efforts to increase consumer protections and increase transparency when it comes to consumer lending.

Key Features Of Reserve Bank of India Gold And Silver Loans Directions 2025

Mentioned below are the key features of Reserve Bank of India Gold and Silver Loans Directions 2025:-

• The only acceptable forms of collateral are silver and gold jewelry or coins. Bullion ingots, ETFs, mutual fund units and other non-jewelry or non-coin items are not permitted.

• For loans up to Rs. 2.5 lakh, the Loan-to-value limit is capped at 85%. For loans falling between range of Rs. 2.5 lakh and Rs. 5 lakh, the LTV is set at 80%. In case of loans exceeding Rs. 5 lakh, the LTV has been restricted to a maximum of 75%. 

• The value of silver or gold must be determined based on either the closing price from the previous day or the 30-day average price, whichever is lower. This valuation should adhere to rates set by an approved body, such as India Bullion & Jewellers Association Ltd. or a recognized commodity exchange. 

• Upon full repayment of the loan principal or loan settlement, the pledged jewellery or coins must be returned within 7 working days. If there is a delay by the lender, a compensation of Rs. 5,000 per day will be payable by the lender to the borrower.

• In case of default, a notice of demand and auction will be served. A public auction will be announced if the borrower remains uncontactable after one month. The reserve price for the auction will not be less than 90% of the current price, which may later be reduced to 85% if two auctions fail.

Since the guidelines will become effective from 1 April 2026, the banks and NBFCs get sufficient time to restructure their internal processes and product development to fully utilize the updated framework. 

Source: India.com