New Delhi: The Reserve Bank of India (RBI) has issued fresh guidelines titled “Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025,” introducing uniform rules for lending against gold and silver. The new norms will take effect from April 1, 2026, according to reports.

Who can offer gold and silver loans?

Under the new framework, the following institutions can provide loans against gold and silver:

  • Commercial banks (including small finance and regional rural banks)
  • Urban and rural co-operative banks
  • Non-Banking Financial Companies (NBFCs) and housing finance firms

Eligibility and restrictions

The RBI has restricted lending against primary (bullion) gold and silver due to macro-prudential concerns.

However, banks and NBFCs can offer loans against jewellery, ornaments, and coins for short-term financing.

Lenders cannot:

  • Grant loans against bullion or financial assets backed by gold/silver (like ETFs or mutual fund units).
  • Lend where collateral ownership is uncertain.
  • Repledge gold or silver pledged by borrowers.
  • Lend to other lenders or entities using already pledged collateral.

Loan limits and LTV ratios

Borrowers can pledge up to 1 kg of gold ornaments or 10 kg of silver ornaments, and up to 50 g of gold coins or 500 g of silver coins.

Maximum loan-to-value (LTV) ratio:

  • Up to ₹2.5 lakh – 85%
  • ₹2.5–5 lakh – 80%
  • Above ₹5 lakh – 75%

Valuation and transparency

The value of gold or silver will be based on the lower of the 30-day average closing price or the previous day’s closing price, as published by IBJA or a SEBI-regulated commodity exchange. Only the intrinsic metal value is considered; precious stones or gems will not be factored in.

Borrowers must be present during testing, and lenders must issue a valuation certificate. Loan documents must clearly specify all charges, auction processes, and refund timelines in the local or preferred language of the borrower.

Collateral management and release

Collateral must be stored securely and handled only by authorised employees. Surprise audits are mandatory.

After full repayment, lenders must release pledged gold or silver within seven working days. Any delay beyond this period will attract a compensation of ₹5,000 per day to the borrower.

Auction and default rules

If a borrower defaults, lenders may auction the pledged metal after giving prior notice. The reserve price must be at least 90% of the current value.

After two failed auctions, it can be reduced to 85%. If a borrower is untraceable, a public notice and a one-month waiting period are mandatory before auction.

Unclaimed collateral

Gold or silver lying unclaimed for over two years after loan settlement must be tracked through special drives to locate borrowers or their legal heirs.