RBI allows loans against silver jewellery from April 2026. Know eligibility, LTV ratios, rules, and borrower safeguards under the new silver loan guidelines

OdishaPlus Bureau

The Reserve Bank of India (RBI) has made an important decision to allow people to get loans using silver as a guarantee, just like gold. From April 1, 2026, banks, NBFCs, and cooperative banks all over India can give loans against silver jewellery and coins. This new rule, announced in June 2025, is designed to help more families, especially in rural and semi-urban areas, by making it easier to borrow money using their silver, which is often seen as a valuable asset.

What’s Eligible and What’s Not
Only certain types of silver will be accepted as collateral. Borrowers can pledge up to 10 kilograms of silver jewellery or ornaments, and up to 500 grams of silver coins. However, silver bars, bullion, and financial assets like ETFs or mutual funds backed by silver are not allowed. This rule is to stop people from hoarding silver just for profit and to make sure the loans are for genuine household use.

How Much Can You Borrow? LTV Ratios Explained
The RBI’s new loan-to-value (LTV) ratios set clear limits for lending against silver:
• For loans up to ₹2.5 lakh, the LTV can go up to 85%.
• For loans above ₹2.5 lakh and up to ₹5 lakh, it’s capped at 80%.
• For loans exceeding ₹5 lakh, the maximum is 75%.
This means, for example, if your eligible silver is valued at ₹1,00,000, you could receive up to ₹85,000 as a loan, provided the total amount does not cross the ₹2.5 lakh mark.

The Borrower’s Journey: How a Silver Loan Works
The process closely mirrors that of a gold loan, but the RBI’s directions call for extra borrower safeguards:

  1. Pledging and Valuation: You bring your silver jewellery or coins to a regulated lender. The lender’s assayer checks purity and weight, and values the collateral based on its metal content, using a conservative market price set by the India Bullion and Jewellers Association (IBJA) or a SEBI-regulated exchange.
  2. Loan Approval: Your loan amount is calculated per the tiered LTV—85%, 80%, or 75%. For high-value loans, lenders may also review your repayment capacity in detail.
  3. Documentation and Disbursement: Lenders must provide a Key Fact Statement, clearly outlining interest rates, fees, and all charges to ensure transparency. Once you accept the terms, funds are quickly disbursed—often the same day.
  4. Repayment: Borrowers can choose various repayment modes, including EMIs or bullet payments.
  5. Collateral Return: Upon full repayment, the lender must return your pledged silver within seven working days. Failing to do so means the lender must pay you a penalty of ₹5,000 per day until your collateral is returned—an unprecedented borrower safeguard.
  6. Auction in Default: In case of a default, the lender must give notice and publicly announce the auction. The reserve price cannot be below 90% of the silver’s current value, protecting borrowers from distress sales.

By standardising and strengthening the regulations, RBI aims silver to become a trusted and easy-to-use asset for millions of households looking for quick loans, especially in rural and semi-urban areas where silver is commonly kept and valued.

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