RBI Opens the Vault: Loans Against Silver Now a Reality in India
India has long relied on gold loans as a trusted source of short-term credit. Now, silver joins the ranks. The Reserve Bank of India (RBI)has issued new guidelines allowing banks and Non-Banking Financial Companies(NBFCs) to lend against silver jewelry and coins — much like gold loans.
Effective April 1, 2026, this reform marks a milestone in monetizing the “white metal” for both households and small businesses. Given India’s position as the world’s largest silver consumer and the ₹11.8 trillion organized gold loan market (projected to reach ₹18 trillion by 2027), this step will reshape how Indians access secured credit.
RBI’s New Guidelines at a Glance
Under the RBI Lending Against Gold and Silver Collateral Directions, 2025 lenders can now accept silver as collateral for loans.
The framework, effective from April 2026, brings uniform rules for all regulated lenders and ensures transparency and borrower protection.
Who Can Lend: All Banks, Co-Operative banks, Small Finance banks, and NBFCs (including housing finance companies).
What Qualifies: Only silver ornaments and coins — bullion or ETFs are excluded to prevent speculation.
Implementation:The rules take effect April 1, 2026, giving lenders a year to prepare their systems.
From that date, borrowers can walk into a bank or NBFC and pledge silver jewellery or coins for a loan — an option previously unavailable in the formal sector.
Loan Value: Tiered LTV Ratios
The RBI has also revised Loan-to-Value (LTV) ratios to balance accessibility and risk.
Loans up to ₹2.5 lakh:- Maximum 85% of metal value
Loans ₹2.5–5 lakh:- Maximum 80%
Loans above ₹5 lakh:- Maximum 75%
This tiered structure encourages small-ticket loans for urgent needs while ensuring larger loans remain conservative. For Example, ₹1 lakh worth of silver could fetch ₹85,000 in a small loan, while a ₹7 lakh pledge would yield ₹5.25 lakh.
Lenders must maintain these ratios throughout the loan, recalibrating if prices fall. This keeps both borrowers and lender protected from volatility.
Fair Valuation and Purity Standards
RBI has standardized valuation to ensure fairness across lenders. Silver will be valued at the lower of the 30-day average price or the previous day’s closing price, as per data from IBJA or a SEBI-recognized commodity exchange.
Only intrinsic silver value counts — making charges, gems, and embellishments are excluded.
Standardized assaying procedures are mandatory, and borrowers can be present during purity testing.
Lenders must issue a valuation certificate detailing purity, weight, and appraised value.
This creates a uniform, transparent system across branches and regions, minimizing disputes and boosting borrower trust.
These limits accommodate typical household holdings while excluding commercial bullion.
The goal is simple, allow retail and small-business borrowers to unlock the value of family assets without fueling speculative lending.
Borrower Protections and Collateral Security
The new norms also establish strong customer safeguards — a major improvement over previous informal lending practices.
1. Secure storage:- All pledged silver and gold must be kept in the lender’s own insured vaults and handled only by authorized employees. Regular audits and surprise inspections are mandatory.
2. Quick release after repayment:-Lenders must return collateral immediately on loan closure and no later than 7 working days. Delays beyond that trigger a ₹5,000 per day penalty to the borrower — a strong incentive for lenders to streamline release procedures.
3. In case of default:- If a borrower defaults, the lender must issue prior notice before auction. If the borrower is unreachable, a public notice and 30-day waiting period apply. The reserve auction price must be at least 90% of current market value, and if unsold twice, not below 85% in subsequent auctions.
4. Unclaimed collateral:-Any pledged silver or gold unclaimed for over two years post-loan must be publicly declared as unclaimed, with efforts to locate the borrower or heirs.
These measures ensure borrowers’ assets are valued, handled, and returned with accountability, setting a new benchmark for transparency.
Why This Matters for Borrowers
Allowing loans against silver unlocks enormous financial potential for millions of Indian households.
1. Unlocking Idle Wealth
India imports and consumes over 7,600 tons of silver annually. Much of this sits in homes as jewelry, silverware, or gifts. RBI’s move converts this idle wealth into usable capital. Families reluctant to pledge gold can now leverage silver for urgent needs — medical expenses, education, or small business expansion — without selling their assets.
2. Affordable and Accessible Credit
Silver loans are expected to mirror gold loan structures — lower interest rates, instant disbursal, and short tenures. For rural and semi-urban borrowers who own silver but little gold, this widens access to formal, affordable credit. It also shifts borrowing away from informal money lenders, aligning with RBI’s goal of broadening credit inclusion.
3. Flexibility for MSMEs and Farmers
Small businesses and farmers who already use gold loans during seasonal cash crunches now gain an additional financing tool. Silver, often less emotionally attached to gold, offers flexibility during lean periods. RBI has even permitted farm credit against gold/silver, further integrating rural borrowers into formal finance.
4. Retaining Ownership and Dignity
Borrowers retain ownership of their pledged silver. With strict auction norms and mandatory quick return, they can borrow with confidence. This protects family assets and fosters trust between lender and borrower.
In short, the guidelines transform silver from a passive store of value into an active financial instrument — democratizing access to liquidity across income groups.
Why NBFCs and Banks Benefit?
For lenders, silver-backed loans are both a growth opportunity and a risk-managedexpansion of an already proven model.
1. New Market and Product Line
Gold-loan specialists like Muthoot Finance and Manappuram Finance have experienced explosive growth with NBFCs holding about ₹2.4trillion in gold loans as of mid-2025. Now, silver broadens that market. NBFC scan cross-sell to existing gold loan customers, while banks can launch new silver loan products targeting rural and semi-urban borrowers.
2. Strong Growth Potential
With India’s silver imports reaching 5,500–6,000 tons in2025, even modest formalization could unlock tens of thousands of crores in new lending. Given the high repayment rates in gold loans, silver loans are expected to perform similarly — yielding steady income at attractive interest rates (typically 12–18% per annum).
3. Competitive Edge and Inclusion
The first movers — whether banks or NBFCs — can capture significant market share. Lenders offering combined gold-silver loan portfolio scan improve customer retention and expand into regions where silver ownership is higher. This enhances brand reach and fosters long-term financial inclusion.
4. Better Regulation, Lower Risk
By capping LTVs, RBI ensures lenders don’t overextend creditor trigger price distortions. The standardized valuation and custody norms reduce fraud risks. In effect, the new policy expands the market without increasing systemic risk — a regulatory balance that supports sustainable growth.
The Indian Context and the Road Ahead
In India, gold has always been the preferred asset for financing, while silver remained underutilized. That is about to change. Financial advisors foresee silver-backed loans becoming a mainstream liquidity tool, especially in Tier-2 and Tier-3 towns.
A simple scenario illustrates the shift: instead of taking a 15% unsecured personal loan, a borrower can now avail a 10–12% silver loan, keeping ownership intact. For lenders, this creates new touchpoints to serve the “common man’s gold” — silver.
The RBI’s decision reflects a forward-looking approach to financial inclusion and asset-based lending. By recognizing silver as collateral, the central bank is bridging the gap between informal and formal credit systems — a move that could formalize billions in household wealth.
We can expect lenders to soon promote products titled “Loans against Gold and Silver”, offering bundled appraisal camps and discounted rates. NBFCs already dominate the gold loan space, and this new category will further strengthen their foothold while encouraging banks to compete with digital and branch-lite models.
Bottom Line
The RBI’s silver-collateral guidelines represent a win-win for every stakeholder.
Borrowers gain a quick, affordable way to unlock liquidity without selling assets.
Banks and NBFCs expand their product mix and deepen inclusion.
Financial advisors gain a new instrument for smart liquidity planning.
And the Indian economy benefits from bringing idle household silver into the credit cycle.
How Lending Technology Accelerates Adoption
For NBFCs, the new silver-loan opportunity will demand faster onboarding, accurate valuation, and real-time compliance tracking across hundreds of branches.
Unified lending platforms like AllCloud’s technology can automate LTV calculations, collateral management, and auction workflows, ensuring every branch follows RBI’s prescribed limits and timelines. With integrated LOS–LMS systems, NBFCs can instantly capture assay results, trigger alerts when LTV thresholds are breached, and generate audit-ready records for inspections.
Digitizing these processes reduces manual errors, improves turnaround time, and provides a single source of truth for all gold and silver loans—helping NBFCs scale responsibly while staying compliant from Day One!
Sources:- The information in this article is based on the latest RBI circular and expert analyses. Key details of the new rules (effective April 2026) were confirmed from RBI’s official notification and reported by trusted financial news outlets- Angelone.in BFSI Economic times Economic Times
RBI Opens the Vault: Loans Against Silver Now a Reality in India
November 10, 2025
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India has long relied on gold loans as a trusted source of short-term credit. Now, silver joins the ranks. The Reserve Bank of India (RBI)has issued new guidelines allowing banks and Non-Banking Financial Companies(NBFCs) to lend against silver jewelry and coins — much like gold loans.
Effective April 1, 2026, this reform marks a milestone in monetizing the “white metal” for both households and small businesses. Given India’s position as the world’s largest silver consumer and the ₹11.8 trillion organized gold loan market (projected to reach ₹18 trillion by 2027), this step will reshape how Indians access secured credit.
RBI’s New Guidelines at a Glance
Under the RBI Lending Against Gold and Silver Collateral Directions, 2025 lenders can now accept silver as collateral for loans.
The framework, effective from April 2026, brings uniform rules for all regulated lenders and ensures transparency and borrower protection.
Who Can Lend: All Banks, Co-Operative banks, Small Finance banks, and NBFCs (including housing finance companies).
What Qualifies: Only silver ornaments and coins — bullion or ETFs are excluded to prevent speculation.
Implementation:The rules take effect April 1, 2026, giving lenders a year to prepare their systems.
From that date, borrowers can walk into a bank or NBFC and pledge silver jewellery or coins for a loan — an option previously unavailable in the formal sector.
Loan Value: Tiered LTV Ratios
The RBI has also revised Loan-to-Value (LTV) ratios to balance accessibility and risk.
Loans up to ₹2.5 lakh:- Maximum 85% of metal value
Loans ₹2.5–5 lakh:- Maximum 80%
Loans above ₹5 lakh:- Maximum 75%
This tiered structure encourages small-ticket loans for urgent needs while ensuring larger loans remain conservative. For Example, ₹1 lakh worth of silver could fetch ₹85,000 in a small loan, while a ₹7 lakh pledge would yield ₹5.25 lakh.
Lenders must maintain these ratios throughout the loan, recalibrating if prices fall. This keeps both borrowers and lender protected from volatility.
Fair Valuation and Purity Standards
RBI has standardized valuation to ensure fairness across lenders. Silver will be valued at the lower of the 30-day average price or the previous day’s closing price, as per data from IBJA or a SEBI-recognized commodity exchange.
Only intrinsic silver value counts — making charges, gems, and embellishments are excluded.
Standardized assaying procedures are mandatory, and borrowers can be present during purity testing.
Lenders must issue a valuation certificate detailing purity, weight, and appraised value.
This creates a uniform, transparent system across branches and regions, minimizing disputes and boosting borrower trust.
These limits accommodate typical household holdings while excluding commercial bullion.
The goal is simple, allow retail and small-business borrowers to unlock the value of family assets without fueling speculative lending.
Borrower Protections and Collateral Security
The new norms also establish strong customer safeguards — a major improvement over previous informal lending practices.
1. Secure storage:- All pledged silver and gold must be kept in the lender’s own insured vaults and handled only by authorized employees. Regular audits and surprise inspections are mandatory.
2. Quick release after repayment:-Lenders must return collateral immediately on loan closure and no later than 7 working days. Delays beyond that trigger a ₹5,000 per day penalty to the borrower — a strong incentive for lenders to streamline release procedures.
3. In case of default:- If a borrower defaults, the lender must issue prior notice before auction. If the borrower is unreachable, a public notice and 30-day waiting period apply. The reserve auction price must be at least 90% of current market value, and if unsold twice, not below 85% in subsequent auctions.
4. Unclaimed collateral:-Any pledged silver or gold unclaimed for over two years post-loan must be publicly declared as unclaimed, with efforts to locate the borrower or heirs.
These measures ensure borrowers’ assets are valued, handled, and returned with accountability, setting a new benchmark for transparency.
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