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The Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025 has set guidelines for silver-backed loans, asking lenders to comply by April 1, 2026.
This means that all RBI-regulated lenders may start accepting silver as collateral for loans. Let’s see the key rules for silver loans as per RBI guidelines.
Loans against primary silver aren’t allowed due to macro-prudential concerns. Loans can only be offered against ornaments, jewellery and coins.
Lenders can’t offer loans against financial assets backed by silver, like ETFs and mutual funds. Further, loans aren’t allowed for the purchase of silver.
However, Scheduled Commercial Banks and Tier 3 and 4 Urban Co-operative Banks (UCBs) can offer working capital loans for manufacturing or industrial use.
The total weight of silver pledged for all loans to a borrower cannot be over 10 kgs, and the aggregate weight of silver coins pledged for all loans to a borrower shall not exceed 500 gm.
The maximum loan-to-value (LTV) ratio can be 85% for a loan of up to ₹2.5 lakh, 80% for loans between ₹2.5 lakh and ₹5 lakh, and 75% above ₹5 lakh.
LTV ratio is the percentage of an asset’s value that a lender finances for a borrower. The prescribed LTV ratio must be maintained on an ongoing basis throughout the tenor of the loan.
Lenders cannot get loans by re-pledging the silver that was already pledged to them, and can’t offer loans to other lenders by accepting silver collateral pledged to such lenders.
A declaration must be obtained from the borrower to the effect that he/she is the rightful owner of the eligible collateral. If the ownership of silver is doubtful, lenders cannot grant loans.
The RBI has issued many other guidelines for silver and gold loans aimed at ensuring consumers’ safety through a standard procedure.
While some local NBFCs and other lenders already offer silver loans informally, they’re not fully regulated. Soon, silver loans will officially enter India's financial ecosystem.
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