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RBI issues guidelines for loans against silver

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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. 

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National News

MCX Gold, Silver Surge On Escalating Geopolitical Tensions

The Softer Dollar Provided Limited Support To Bullion, While Traders Largely Focused On The Geopolitical Backdrop and The Prospect Of Fresh Clues On U.S. Monetary Policy.

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Gold and silver prices edged higher in India on Monday as renewed geopolitical tensions in the Middle East boosted demand for safe-haven assets, even as investors remained cautious ahead of key U.S. inflation data expected later this week.

On the Multi Commodity Exchange (MCX), gold futures rose more than Rs 650 to trade above Rs 1.40 lakh per 10 grams, while silver futures gained nearly Rs 700 to move aboveRs Rs 2.18 lakh per kilogram. The advance reflected renewed risk aversion after the United States tightened pressure on Iran, rekindling concerns over the security of global energy supplies and the broader inflation outlook.

In international markets, spot gold rose about 0.4% to around $4,016 an ounce, recovering after briefly slipping below the psychologically important $4,000 level overnight. Spot silver also rebounded modestly but remained under pressure, trading near $58 an ounce.

The gains in precious metals came despite a relatively resilient U.S. dollar, which eased only marginally to around 101.2 against a basket of major currencies. The softer dollar provided limited support to bullion, while traders largely focused on the geopolitical backdrop and the prospect of fresh clues on U.S. monetary policy.

Energy markets reflected the same risk-off sentiment. U.S. West Texas Intermediate crude climbed toward $80 a barrel, while Brent crude advanced to around $85, extending gains as fears of supply disruptions returned to the forefront.

The latest catalyst came after President Donald Trump reinstated a blockade on Iranian vessels transiting the Strait of Hormuz and called on countries benefiting from U.S. naval protection to contribute toward securing the strategically vital shipping corridor. The move followed renewed hostilities between Washington and Tehran, heightening concerns that disruptions to one of the world’s busiest oil routes could fuel another wave of energy-driven inflation.

Higher oil prices have complicated the outlook for global central banks, particularly the U.S. Federal Reserve, which continues to balance inflation risks against slowing economic growth.

Investors are now turning their attention to the U.S. Consumer Price Index (CPI) data due Tuesday, which is expected to provide fresh direction for interest-rate expectations. Markets will also closely monitor Federal Reserve Chair Kevin Warsh’s testimony before Congress for signals on the central bank’s policy trajectory.

According to market pricing, traders now see roughly a 51% probability of a Federal Reserve rate hike in September, while the likelihood of rates remaining unchanged has fallen to about 23%.

For bullion markets, the interplay between geopolitical uncertainty, energy prices and monetary policy expectations is likely to remain the dominant theme. While safe-haven demand continues to underpin gold, any surprise in inflation data or a shift in the Federal Reserve’s policy outlook could determine whether the metal extends its rally or faces renewed selling pressure.

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