The Reserve Bank of India (RBI) has introduced a formal, standardized framework for loans against silver, which will be fully effective from April 1, 2026. These new guidelines bring silver lending under a unified regulatory umbrella, similar to existing gold loan regulations, to protect borrowers and formalize the market. 

Key RBI Guidelines for Loans Against Silver

The “Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025” establish the following rules for all regulated entities, including commercial banks and Non-Banking Financial Companies (NBFCs): 

• Eligible Collateral: Only silver jewellery, ornaments, and coins with a minimum purity of 925 (sterling silver) are accepted.
• Ineligible Collateral: Loans cannot be offered against primary silver (bullion, bars, or slabs), or financial products like Silver Exchange-Traded Funds (ETFs) or mutual funds.
• Collateral Limits: A borrower can pledge up to a maximum of 10 kilograms of silver ornaments and up to 500 grams of silver coins.
• Loan-to-Value (LTV) Ratio: The maximum LTV (loan amount as a percentage of the silver’s value) is tiered based on the loan amount:
• 85% for loans up to Rs.5 lakh.
• 80% for loans between Rs2.5 lakh and ₹5 lakh.
• 75% for loans above Rs.5 lakh.
• Valuation: Silver collateral is valued based on its intrinsic value and actual purity. The reference price will be the lower of (a) the average closing price over the preceding 30 days or (b) the closing price of the preceding day, as published by the India Bullion and Jewellers Association Ltd. (IBJA) or a SEBI-regulated commodity exchange.
• Loan Purpose: The guidelines cover loans for consumption and income generation purposes. Lenders are generally prohibited from extending loans for the speculative purchase of silver.
• Borrower Protection: Lenders must follow standardized procedures for purity checks, provide clear loan terms in the borrower’s language, and securely store the collateral. Penalties are in place for delayed release of collateral after full repayment (₹5,000 per day after seven working days).
• No Re-pledging: Lenders are prohibited from re-pledging the silver collateral to other entities.