As part of updated lending criteria for commercial banks, non-banking financial businesses, cooperative banks, and housing finance institutions, the Reserve Bank of India (RBI) will permit borrowers to pledge silver jewelry, ornaments, or coins as collateral for loans starting on April 1, 2026.

Key Highlights

• New Reserve Bank of India guidelines let individuals pledge silver jewellery and coins from 1 April 2026.
• Loans against silver may carry lower loan-to-value ratios and higher interest rates due to silver’s reduced liquidity.

In addition to standardizing borrower protections and guaranteeing clearer accountability among lenders, these modifications are intended to increase credit availability, especially for individuals who have historically relied on gold-backed loans. In order to limit speculative activity in the precious metals market, loans secured by primary silver, such as bullion, will continue to be prohibited.

Industry analysts predict that this policy will benefit low-income households and small enterprises, particularly in rural areas where silver frequently has cultural and economic value.

However, because silver is less liquid and more volatile than gold, the RBI has noted that loans secured by silver may have different loan-to-value ratios and interest rates. As a result, lenders may set slightly higher interest rates and lower credit limits for loans backed by silver.

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The purity of the pledged silver, storage and insurance costs, repayment plans, and foreclosure terms are all important considerations for borrowers. The lender's reputation, daily changes in silver prices, and the total cost of borrowing are also crucial. When choosing silver-backed loans, industry professionals emphasize how crucial it is to comprehend these dangers and the practical factors that go beyond the loan amount's face worth.