Starting April 1, 2026, borrowers across India will be able to avail loans against silver jewellery under a standardised lending framework issued by the Reserve Bank of India (RBI). This initiative aims to broaden access to secured credit beyond traditional gold loans. The framework will apply to commercial banks, NBFCs, cooperative banks, and housing finance companies, ensuring uniform practices and greater transparency.
Key Features of the RBI Silver Loan Framework
- Eligible Collateral: Silver jewellery, ornaments, or coins.
- Ineligible Collateral: Primary silver such as bullion, to prevent speculative lending.
- Purpose: Short-term personal or business financing, particularly for rural and low-income borrowers.
- Scope: Loans can be availed by individuals and small traders, enabling access to formal credit using household silver assets.
Financial Inclusion and Transparency
- Promotes borrower protection and lender accountability.
- Expands credit access in semi-urban and rural areas, where silver is often used for savings, gifts, or household wealth.
- Offers alternative credit channel to underbanked populations, supporting small businesses and families.
Silver Loans vs Gold Loans
- Loan-to-Value (LTV) and Pricing: Silver loans may have lower LTV ratios and slightly higher interest rates due to price volatility and lower liquidity compared to gold.
- Gold loans typically have higher LTVs and lower rates owing to stable prices and strong market demand.
- Despite these differences, silver loans are expected to be a practical financial buffer for households and businesses with limited access to formal credit.
Impact on Borrowers and Lenders
- Expands the reach of asset-backed lending to millions of unbanked or underbanked citizens.
- Provides lenders with a secured lending option with low default risk, leveraging tangible collateral.
- Supports financial inclusion and strengthens India’s formal credit ecosystem.
Summary:
From April 2026, the RBI’s new silver loan framework will allow individuals and small businesses to pledge silver jewellery as collateral, widening access to formal credit and supporting financial inclusion, particularly in rural and semi-urban India. The move offers lenders a low-risk secured lending channel while providing borrowers an additional source of liquidity.
Disclaimer:
This article is intended solely for educational and informational purposes. The securities or companies mentioned are provided as examples and should not be considered as recommendations. Nothing contained herein constitutes personal financial advice or investment recommendations. Readers are advised to conduct their own research and consult a qualified financial advisor before making any investment decisions.
Investments in securities markets are subject to market risks. Please read all related documents carefully before investing.