The Reserve Bank of India has officially introduced a major update in its lending guidelines with the launch of the new Silver Loan Framework, allowing people to take loans by pledging silver jewellery and silver coins. These rules will come into effect from 1 April 2026, marking a major shift from the earlier system where only gold was accepted for collateral-based lending. The new guidelines aim to expand access to credit, bring transparency, and benefit millions of households that hold silver as a primary asset.
Why RBI Introduced New Silver Loan Rules
Silver is widely owned across rural and semi-urban households, often more than gold. However, borrowers had no formal banking option to raise funds against silver assets. By including silver under regulated collateral, RBI aims to reduce dependence on informal money lenders and ensure that people can access affordable, transparent banking credit when needed.
What Can You Pledge Under the New Rules
Under the updated guidelines, borrowers can now pledge silver jewellery, ornaments, and silver coins. RBI has allowed lenders to accept up to 10 kg of silver ornaments and 500 grams of silver coins, giving borrowers a wider opportunity to raise funds legally and securely.
Loan-to-Value (LTV) Ratio for Silver Loans
The RBI has fixed the LTV ratio based on loan amount to ensure safe and regulated lending.
For loans up to the specified limits, the LTV policy will apply as follows:
- Loans up to ₹2.5 lakh can get an 85% LTV.
- Loans between ₹2.5 lakh to ₹5 lakh will get 80% LTV.
- Loans above ₹5 lakh will have a 75% LTV.
This ensures that loan amounts remain balanced with the market value of the pledged silver.
How Silver Will Be Valued
The valuation of silver will be done using the lower of two prices – the previous day’s closing rate or the 30-day average market price. Decorative stones, gems or non-silver components will not be included in the valuation. This ensures fair and transparent pricing for both the borrower and the lender.
Borrower Protection: 7-Day Collateral Return Rule
One of the strongest borrower-friendly provisions is the mandatory 7-day return rule. After a borrower repays the full loan amount, the lender must return the pledged silver within 7 working days. Failure to do so will require the lender to pay ₹5,000 per day as compensation.
Who Can Offer Silver Loans
The silver loan facility can be offered by:
- Commercial banks
- Co-operative banks
- Regional rural banks
- NBFCs
- Housing finance companies
This ensures that borrowers have multiple regulated avenues to access credit under this scheme.
Why This Matters for Borrowers
By allowing silver as collateral, RBI has widened financial access, especially for families who hold silver as their primary savings asset. People can now raise funds during emergencies, business needs or personal requirements without selling their silver. This move is expected to significantly reduce the control of unregulated money lenders in rural areas.
Conclusion: The new RBI silver loan rules, coming into effect from April 2026, mark a historic step in India’s lending framework. With better transparency, defined valuation standards and borrower protections, the silver loan system is set to become a widely used financial support mechanism for millions of households.
Disclaimer: Loan terms, interest rates and eligibility criteria may vary by lender. Always verify details with your bank or NBFC before pledging your silver assets.
