RBI Allows Loans Against Silver Jewellery from April 2026 to Broaden Credit Access

Starting April 1, 2026, borrowers across India will be able to take loans against silver jewellery under the Reserve Bank of India’s (RBI) new standardised lending framework, a move that widens access to secured credit beyond traditional gold loans. The updated rules apply to commercial banks, NBFCs, cooperative banks, and housing finance companies, ensuring uniform lending practices and greater transparency.

Key Features of the New Framework

Under the new guidelines, individuals will be allowed to pledge silver jewellery, ornaments, or coins as collateral for short-term financial requirements. The loans are designed to help borrowers, particularly from rural and low-income segments, access credit using household silver assets.

However, the RBI has specified that loans against primary silver, such as bullion, will not be allowed. This restriction is intended to discourage speculative activity and ensure that silver lending remains focused on genuine personal and business financing needs rather than investment purposes.

Focus on Financial Inclusion and Transparency

The move is aimed at strengthening borrower protection and enhancing lender accountability. By expanding the range of acceptable collateral, the RBI hopes to promote financial inclusion, especially among small traders and families in semi-urban and rural areas, where silver is often used for savings or gifting.

Silver Loans vs Gold Loans

While silver-backed loans open new credit channels, they differ from gold loans in terms of loan-to-value (LTV) ratios and pricing. Because silver prices are more volatile and the metal is less liquid than gold, lenders may offer lower credit limits and slightly higher interest rates to manage risk.

Gold loans, by contrast, typically enjoy higher LTV caps due to gold’s price stability and ready market liquidity. Despite these variations, silver loans are expected to serve as a valuable financial buffer, especially for rural households and small business owners who possess silver assets but limited access to formal credit.

Impact on Borrowers and Lenders

The RBI’s decision is expected to expand the reach of asset-backed lending, offering an additional credit channel to millions of unbanked or underbanked citizens. It also gives lenders a new avenue for secured lending with relatively low default risk, given the tangible nature of the collateral.

Read More: RBI Includes Municipal Bonds as Eligible Collateral in Repo Transactions.

Conclusion

By allowing loans against silver jewellery, the RBI has taken another step toward improving credit accessibility and formalising collateral-based lending. The measure broadens financial inclusion while maintaining safeguards against speculative risk, ensuring both borrowers and lenders benefit from a transparent and standardised framework.

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