Silver is about to get a new role in the lending world. From April 1, 2026, it will officially join gold as accepted collateral for loans under the Reserve Bank of India’s (RBI) new standardised lending guidelines. The central bank, through a notification on June 6, announced that all regulated lenders—banks, non-banking financial companies (NBFCs), cooperative banks, and housing finance firms—must follow the same rulebook for loans against gold and silver.
The move is seen as an effort to bring more uniformity, transparency, and borrower protection to a segment often marked by inconsistent practices. The RBI also appears keen to ensure accountability among lenders and reduce disputes over valuation and repayment.
The new norms permit loans against gold and silver jewellery, ornaments, or coins—essentially items with clear ownership and limited market volatility. However, loans against primary metals such as gold or silver bullion are off the table, as the RBI wants to avoid fuelling speculative trades in precious metals.
Borrowers also cannot re-pledge already mortgaged gold or silver, nor can they borrow money to purchase bullion or gold-backed securities like ETFs.
Borrowers will now be able to get loans up to 85% of the metal’s value, an increase from the earlier 75%. This applies to total loan amounts up to ₹2.5 lakh, including interest. To put it simply, if your gold is valued at ₹1 lakh, you can borrow up to ₹85,000 against it.
There are clear quantity limits as well. Borrowers can pledge up to 1 kg of gold ornaments or 50 grams of gold coins. For silver, the limit is 10 kg for ornaments and 500 grams for coins. These limits apply per borrower across all lender branches to prevent over-leveraging.
Those familiar with “bullet repayment” loans—where interest and principal are paid together at the end—will now face a 12-month cap. This change is meant to reduce defaults and ensure timely repayment cycles, especially in small-ticket lending.
When borrowers repay their loans, lenders must return their pledged gold or silver immediately—on the same day—or within seven working days. If there’s any delay, the lender will have to pay ₹5,000 per day as compensation.
In case of loss or damage to the pledged items during storage or audits, lenders are required to fully compensate borrowers.
If a borrower defaults, the lender must issue proper notice before auctioning the pledged items. The reserve price for such auctions should be at least 90% of the market value, dropping to 85% only after two failed attempts. Any surplus money from the auction must be returned to the borrower within seven working days.
RBI also insists that all loan documents, including valuation details and repayment terms, must be provided in the borrower’s preferred or regional language. For illiterate borrowers, this must be done in the presence of an independent witness.
The move to include silver in the lending framework may open new doors for borrowers, particularly in rural areas where silver is often a form of household savings. By setting uniform standards, the RBI aims to make gold and silver lending safer, quicker, and more transparent—without encouraging reckless speculation.