Loan Against Silver From April 1, 2026: Get Loan With Silver As Collateral Just Like Gold; Key Points To Know

In major good news, soon borrowers will be able to get loans against their physical silver as collateral. Up till now, only gold is allowed to be used as collateral when borrowing funds from banks and other financial institutions. But RBI has revised its guidelines, allowing silver as an option for loans as well. This new guideline will come into effect from April 1, 2026.

Before getting into details of new guidelines related to loan against silver, let's understand what a collateral loan is.

What are collateral loans?

A loan against collateral falls under the category of secured borrowing. This is because a borrower is pledging a tangible asset to the lender for the money they are borrowing. The tangible asset becomes a collateral security and also acts as a guarantee to the bank for the money they lent. The risk factor is lower here compared to unsecured loans.

Not just that collateral loans enable the opportunity for higher loan amounts but at a lower interest rates.

The amount that is sanctioned as loan depends upon a percentage of the total cost of the physical asset you offer. There are various options to take loan against collateral such as gold, property, and even fixed deposits up till now. Silver will be a new addition to these collateral list.

Taking loan against collateral is also easy. You just have to visit the nearest branch of the lender with your ornaments. The bank will value the ornaments in your presence and then calculate the maximum loan amount.

Loan Against Silver Rules:

How Loan Against Silver Will Be Decided?

As per RBI's new (Lending Against Gold and Silver Collateral) Directions, 2025 guidelines, gold and silver accepted as collateral shall be valued based on the reference price corresponding to its actual purity (caratage).

The lower of (a) the average closing price for gold or silver, as the case may be, of that specific purity over the preceding 30 days, or (b) the closing price for gold or silver, as the case may be, of that specific purity on the preceding day, as published either by the India Bullion and Jewellers Association Ltd. (IBJA) or by a commodity exchange regulated by the Securities and Exchange Board of India (SEBI) shall be used.

Also, if the information for the specific purity is not directly available, the lender shall use the published price available for the nearest available purity and proportionately adjust the weight of the collateral based on its actual purity to arrive at valuation.

Additionally, for the purpose of valuation, only the intrinsic value of the gold or silver contained in the eligible collateral shall be reckoned and no other cost elements, such as precious stones or gems, shall be added thereto.

Loan Against Silver LTV Ratio:

The maximum LTV ratio in respect of consumption loans against the eligible collateral shall not exceed LTV ratios mentioned below:

- Maximum LTV ratio is 85% for loan amounts up to Rs 2.5 lakh.

- Maximum LTV ratio will be 80% on loan amounts between Rs 2.5 lakh and Rs 5 lakh.

- Maximum LTV ratio will be 75% if the borrower requires a loan above Rs 5 lakh.

However, RBI also announced major restrictions and ceilings for giving loans against silver.

Loan Against Silver Restrictions:

Under the new guidelines, a lender shall not grant any advance or loan for purchase of gold in any form including primary gold, ornaments, jewellery, or coins, or for purchase of financial assets backed by gold, e.g., units of Exchange-traded funds (ETFs) or units of Mutual Funds.

Also, a lender shall not grant any advance or loan against primary gold or silver or financial assets backed by primary gold or silver.

Although, 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, where such gold or silver can also be accepted as security. A bank extending such finance shall ensure that borrowers do not acquire or hold gold for investment or speculative purposes.

Furthermore, loan against ornaments and coins is subject to:

-the aggregate weight of ornaments pledged for all loans to a borrower shall not exceed 1 kilogram for gold ornaments, and 10 kilograms for silver ornaments.

-the aggregate weight of coin(s) pledged for all loans to a borrower shall not exceed 50 grams in case of gold coins, and 500 grams in case of silver coins.

In case of maturity period, the tenor of consumption loans in the nature of bullet repayment loans shall be capped at 12 months, which may be renewed under certain conditions.

Moreover, lenders are not allowed to re-pledge gold or silver pledged to it by its borrowers. They cannot extend loans to other lenders, entities or individuals by accepting gold or silver collateral pledged to such lenders, entities, or individuals by their borrowers as collateral.

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