Soon, all RBI-regulated banks may start accepting silver as collateral for loans, just like Gold Loan. The RBI has released new guidelines for Gold and Silver Loans. The Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025, has laid down rules for silver-backed loans. RBI has asked banks to comply with these norms by April 1, 2026.
Currently, banks and other financial institutions widely offer gold loans, but silver loans aren’t that common in banking. Many banks don’t accept silver as collateral for loans. While some cooperative banks, local NFBCs or other lenders accept silver informally, it’s not widely regulated.
But Why? The reason might be the price of silver. The cost of silver is less and thus, loan amount would not be much for silver. Moreover, for giving more loan, banks will have to keep more silver as mortgage and cost of storage might also increase and silver has less market liquidity than gold.
However, silver has seen a massive rally in 2025, with prices surpassing lifetime highs in October and hitting ₹1.9 lakh/kg in the Indian markets. According to the Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025, silver loans can be legally and officially offered by banks.
“Instructions issued vide these Directions shall be complied with as expeditiously as possible, but no later than April 1, 2026. Loans sanctioned prior to the date of adoption of the Directions by the Regulated Entities shall continue to be governed by the extant guidelines applicable before the issuance of these Directions,” the RBI said.
You can download RBI Circular on Gold Loan and Silver Loan via link given below. But first read the important points to understand it in a better way.
Gold loans
Gold has always been one of the most valuable metals in the world. Since ancient times, people have used gold as a guarantee (collateral) to get loans. In old civilizations like Egypt, Greece, and Rome, people would give their gold to rich lenders or temples to borrow money. This system existed long before modern banks were created.
India also has a long connection with gold loans. The first known use of gold as security for a loan in India was in 1959. Later, around 1998–99, the Reserve Bank of India (RBI) officially allowed banks to give loans against gold. This helped more people, especially in rural areas, to get credit easily and reduced their dependence on local moneylenders.
Gold became very popular as a loan security because it is valuable, easy to sell (liquid), and accepted everywhere. It also holds strong cultural and emotional value in India. In fact, before paper money was introduced, gold was the main basis of money around the world.
Even today, gold loans remain one of the most trusted and quick loan options in India. Now, a new development has arrived — silver can also be used to get loans. In June 2025, the RBI issued new rules called “Lending Against Gold and Silver Collateral Directions, 2025”, allowing banks to give loans against both gold and silver.
This is an important step in expanding India’s lending system and making it easier for people to use their precious metals to get formal credit.
What do RBI guidelines say about silver-backed loans?
According to the Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025:
- Loans are allowed only against ornaments, jewellery and coins. Individuals cannot get a loan against ingots (bars), ETFs, mutual funds, etc. This means you cannot get a silver-backed loan against primary silver (ingots) or financial assets backed by silver (like ETFs).
- Lenders cannot grant an advance for the purchase of silver in any form (jewellery, coins, ETFs, MFs, etc). However, Scheduled Commercial Banks and Tier 3 and 4 Urban Co-operative Banks (UCBs) can offer working capital loans for manufacturing or industrial use. Loans can be offered to borrowers who need silver as a raw material for manufacturing or other industrial activity, as long as they don’t use it for investment or speculative purposes.
“… Scheduled Commercial Bank or a Tier 3 or 4 UCB may extend need-based working capital finance to borrowers who use gold or silver as a raw material, or as an input in their manufacturing or industrial processing activity, for which such gold or silver can also be accepted as security,” RBI directions said.
- The total weight of ornaments pledged for all loans to a borrower cannot be over 10 kgs (the limit is 1 kg for gold). Further, the aggregate weight of coins pledged for all loans to a borrower shall not exceed 500 gram (the limit is 50 gram for gold).
- The maximum loan-to-value (LTV) ratio is 85% for a loan of up to 2.5 lakh, 80% for between ₹2.5 lakh and ₹5 lakh, and 75% above ₹5 lakh. The prescribed LTV ratio must be maintained on an ongoing basis throughout the tenor of the loan, the RBI said in its guidelines. LTV ratio is the percentage of the asset’s value that is being financed by the loan.
- Loans cannot be granted where the ownership of silver is doubtful (just like for gold), and a suitable document or declaration must be obtained from the borrower in all cases to the effect that the borrower is the rightful owner of the eligible collateral.
- Lenders cannot get loans by re-pledging the silver (or gold) that was already pledged to them by their borrowers. Additionally, they cannot offer loans to other lenders by accepting silver collateral pledged to such lenders or entities by their borrowers.
Click here to Download RBI Gold Loan and Silver Loan Circular PDF
