RBI REVOLUTION: Silver Jewellery Now Accepted for Loans! Unlock Hidden Wealth Instantly!

Author

Aditi Singh | Whalesbook News Team

Detailed Coverage:

The Reserve Bank of India (RBI) has introduced a significant regulatory change, permitting loans against silver for the first time, scheduled to commence on April 1, 2026. This reform expands credit access by allowing individuals to pledge their silver jewellery and coins to commercial banks, co-operative banks, Non-Banking Financial Companies (NBFCs), and Housing Finance Companies (HFCs).

These new guidelines, part of the 'Gold and Silver (Loans) Directions, 2025', are designed to enhance transparency and regulation within the precious metal loan market. The RBI has established clear loan-to-value (LTV) limits: up to 85% of the metal's value for loans up to Rs 2.5 lakh, 80% for loans between Rs 2.5 lakh and Rs 5 lakh, and 75% for loans exceeding Rs 5 lakh. For instance, Rs 1 lakh worth of silver could secure an Rs 85,000 loan.

Valuation of silver will be based on the lower of the average market price over the last 30 days or the previous day’s closing rate, sourced from the India Bullion and Jewellers Association (IBJA) or a recognized commodity exchange. The value of any gemstones or other metals will be excluded. After loan repayment, banks must return pledged items within seven working days, with a daily compensation of Rs 5,000 for delays. In case of borrower default, pledged items can be auctioned, but not below 90% of their market value. These rules apply only to silver or gold in the form of jewellery or coins, excluding bullion (like bars) and financial products like gold ETFs.

Impact: This reform is poised to unlock a vast amount of household wealth, offering millions of Indians improved access to formal credit. It could stimulate consumer spending, support small businesses, and deepen financial inclusion. The formalization of lending against silver is a positive development for the financial sector. Rating: 7/10

Difficult terms: * RBI (Reserve Bank of India): India's central bank, responsible for monetary policy, financial regulation, and issuing currency. * NBFCs (Non-Banking Financial Companies): Institutions that provide financial services like loans and advances but do not hold a banking license. * LTV (Loan-to-Value): The ratio of the loan amount to the appraised value of the asset used as collateral. * IBJA (India Bullion and Jewellers Association): A prominent industry association in India that plays a role in standardizing and regulating the bullion market. * Bullion: Gold or silver in bulk form, typically bars or ingots, rather than finished jewellery. * ETFs (Exchange Traded Funds): Investment funds traded on stock exchanges that typically track an underlying index, commodity, or asset class.