Important Facts of the News
- Loan against silver will be allowed from 1 April 2026.
- Banks and NBFCs will be permitted to accept silver jewellery and coins as collateral.
- Up to 10 kilograms of silver can be pledged for loans.
- For silver coins, the maximum limit will be 50 grams.
- Loan-to-value ratio will be up to 85 percent for loans up to Rs 2.5 lakh.
- Loan-to-value ratio will be 80 percent for loans between Rs 2.5 lakh and Rs 5 lakh.
- Loan-to-value ratio will be 75 percent for loans above Rs 5 lakh.
- Borrowers must provide proof of ownership of the silver pledged.
- Banks and NBFCs cannot re-pledge the silver they receive as collateral.
- No loans will be issued for buying silver, silver ETFs, or mutual fund units.
From April 2026, individuals will be able to obtain short-term credit by pledging silver, similar to the current system of loans against gold. The upcoming lending framework introduced by the Reserve Bank of India will allow both banks and non-banking finance companies to treat silver jewellery and silver coins as eligible security for loans.
At present, most financial institutions routinely provide loans against gold, but silver is not widely accepted in the formal credit system. Only a limited number of cooperative banks and local finance providers accept silver informally, and that too without a uniform regulatory structure. The new guidelines aim to bring this practice into the mainstream financial sector.
Eligible Silver for Collateral
Under the revised rules, individuals can pledge silver jewellery, utensils, coins and silver pieces when seeking short-term credit for personal financial needs. However, loans will not be allowed against silver plates, silver exchange-traded funds or silver mutual fund units. Banks also cannot provide loans specifically for purchasing silver in any form.
Industrial borrowers may receive loans for silver-related business requirements, but such approvals will remain subject to individual lending policies of scheduled and government banks.
Loan Amount Limits and Valuation
Borrowers will be able to pledge up to 10 kilograms of silver. In the case of silver coins, the upper limit will be 50 grams. The value of the pledged silver will determine the loan amount, which must remain consistent throughout the loan period.
The loan-to-value ratio will differ based on loan size. For loans up to Rs 2.5 lakh, lenders may extend up to 85 percent of the silver’s assessed market value. For loans in the range of Rs 2.5 lakh to Rs 5 lakh, this ratio will be capped at 80 percent. Loans above Rs 5 lakh will be limited to 75 percent of the silver’s value.
Ownership Verification
Any silver that appears to be of uncertain or disputed ownership will not be accepted. Borrowers must present proper ownership documents or declarations confirming that the silver belongs to them. Additionally, lenders will not be permitted to re-pledge or deposit the pledged silver with another party.
For many households in India, silver has traditionally remained an idle asset with limited liquidity. The new lending framework may improve access to quick credit and could influence demand, pricing and utilization of silver in the domestic market.