The Reserve Bank of India (RBI) has introduced a major reform in the way people can borrow money against precious metals like silver and gold. For the first time, loans will be allowed not just against gold but also silver. Starting April 1, 2026, individuals will be able to pledge their silver jewellery or coins to get loans from banks, NBFCs, and housing finance companies.
These rules are part of the new Reserve Bank of India (Gold and Silver (Loans) Directions, 2025), which aim to make the precious metal loan market more transparent and better regulated. The guidelines also ensure that customers get fair value for their ornaments and timely return of their pledged items.
How much loan you can get
The RBI has set clear loan-to-value (LTV) limits for both silver and gold loans.
For loans up to Rs 2.5 lakh, lenders can offer up to 85% of the metal’s value.
For loans between Rs 2.5 lakh and Rs 5 lakh, the maximum LTV will be 80%.
For loans above Rs 5 lakh, the limit will be 75%.
For example, if your silver jewellery is worth Rs 1 lakh, you can receive a loan of up to Rs 85,000.
How banks will assess the value of silver
To decide the loan amount, lenders will calculate the value of silver using:
The average market price of the last 30 days, or the previous day’s closing rate — whichever is lower.
This price will be sourced from the India Bullion and Jewellers Association (IBJA) or a recognised commodity exchange. The value of gemstones or additional metals in the jewellery will not be counted.
Rules for return and auction of jewellery
After you repay the loan, the bank must return your gold or silver within seven working days. In case of delays caused by the bank, customers will be eligible for a compensation of Rs 5,000 per day.
If a borrower fails to repay, the bank can auction the pledged items—but only at a price not below 90% of their market value. Jewellery that remains unclaimed for over two years will be marked as “unclaimed,” and banks must make special efforts to trace the owner before taking further action.
Who can offer silver-backed loans?
The following institutions are allowed to lend against silver: Commercial banks, including Small Finance and Regional Rural Banks; Urban and rural co-operative banks; and NBFCs and housing finance companies
Where these rules apply
Loans can be given only against silver or gold in the form of jewellery or coins. The RBI has made it clear that loans will not be allowed against bullion such as pure gold or silver bars, or financial products like gold ETFs or gold mutual funds.
The new regulations are expected to bring more borrowers into the formal credit system by offering a new, convenient way to raise funds using household silver.