From April 1, 2025, uniform rules will apply across India for gold and silver loans. The new RBI guidelines aim to make the loan process more transparent, secure,
and reliable. For the first time, silver loans will officially become part of the country’s financial system.
The RBI issued the Lending Against Gold and Silver Collateral Directions in April 2025.
These guidelines standardize testing, valuation, Loan-to-Value (LTV) ratios, and documentation for lending.
Why Small Borrowers Got Relief
When the draft rules were released, farmers and small borrowers raised concerns. Many felt they would not be able to prove their repayment capacity.
Also, in India, gold is usually inherited, so most people do not have ownership documents.
Understanding these issues, the RBI released the final guidelines in June 2025
and relaxed several rules for small borrowers. This was done to ensure they can easily access funds when needed.
Where the New Rules Will Apply
The new guidelines apply to loans taken for personal needs or to increase income, where gold or silver is used as collateral.
For loans above ₹2,50,000, lenders must now check the borrower’s creditworthiness and repayment capacity.
For consumer loans up to ₹2,50,000, the maximum LTV is capped at 85%. Also, all communication with the borrower must be done in their preferred language.
Loans with bullet repayments can be extended again smoothly once the interest is paid.
New LTV Limits
Earlier, gold loans commonly followed a 75% LTV, but there were no uniform rules. Now the RBI has fixed clear limits:
Loans up to ₹2,50,000 → Maximum LTV 85%
Loans from ₹2,50,000 to ₹5,00,000 → Maximum LTV 80%
Loans above ₹5,00,000 → Maximum LTV 75%
These LTV ratios must be maintained throughout the loan period. Earlier, this was not required, often causing losses when the loan value fell.
Uniform Testing for Gold and Silver
Different companies earlier used different methods for testing gold and silver, causing losses due to weight and purity cuts. Now, a uniform testing method will apply nationwide.
The borrower must be present during the test. If any deduction is made for weight or purity, full details must be given in writing. This will reduce miscalculations and fraudulent practices.
What Will Be Accepted as Collateral?
The RBI has clearly stated that loans will be allowed only against gold and silver jewelry and coins. Loans will not be allowed against:
Gold or silver bars (bullion)
Gold/silver ETFs or mutual funds
Gold or silver meant for purchasing more metal
However, banks and certain urban cooperative banks may provide loans as working capital for industrial use.
There are also weight limits:
Gold jewelry: up to 1 kg
Silver jewelry: up to 10 kg
Gold coins: up to 50 grams
Silver coins: up to 500 grams
If the lender suspects the metal does not belong to the borrower, the loan must be denied.
Re-mortgaging the same collateral is strictly banned. Gold and silver must be stored only in branches with secure vaults.
For auctions, strict rules apply—borrowers must be informed in advance, reserve prices must be declared, and lenders cannot participate in the auction.
Silver Recognized Officially for the First Time
Until now, silver loans mostly existed in the informal sector. With the new rules, silver is officially recognized as acceptable collateral.
This will help families who own more silver than gold and previously had limited access to formal credit.
Stronger Customer Protection
The new uniform rules, transparent testing, secure storage, and clear documentation greatly improve customer safety.
Issues such as wrong valuation, excessive deductions, or unfair charges will now be significantly reduced.
