New Gold–Silver Loan Rules Explained: Easier Access, Higher LTV and Major Relaxations for Small Borrowers

New Gold–Silver Loan Framework: How Borrowers Will Get Loans Under the Updated National Rules

From 1 April 2025, India has implemented a uniform set of rules for both gold and silver loans. The Reserve Bank of India’s updated guidelines have brought nationwide clarity to valuation, loan-to-value (LTV), documentation, and collateral assessment. For the first time, silver loans have also been formally recognised within the financial system. These changes promise a fairer, safer and more transparent lending process, especially benefiting small borrowers who often rely on household jewellery during emergencies.

The RBI’s circular, titled Lending Against Gold and Silver Collateral Directions

, aims to standardize how lenders assess gold and silver across all banks, NBFCs and cooperatives. It ensures that every borrower—no matter where they live—receives the same treatment, same valuation method and the same protections.

Why Small Borrowers Received Relaxations

When the initial draft of the new rules was released, farmers and small borrowers raised concerns. Many feared they would be unable to meet documentation requirements or prove creditworthiness. In India, most families inherit jewellery without formal ownership papers, which posed another hurdle.

Acknowledging these issues, the RBI revised the final guidelines in June 2025. Several rules were simplified for small-ticket borrowers so they can continue to access credit easily during emergencies, medical needs or farming seasons. The focus is to ensure affordability and accessibility without compromising safety.

Where the New Rules Apply

The updated guidelines apply to loans taken for personal needs or income-generation activities where gold or silver is pledged as collateral.

Key highlights include:

• For loans above ₹2.5 lakh, lenders must verify the borrower’s credit profile and repayment capacity.

• For consumer loans up to ₹2.5 lakh, the maximum LTV is fixed at 85%.

• All communication with the borrower must be in their preferred language.

• Bullet-repayment loans can be renewed smoothly once interest is cleared, reducing borrower inconvenience.

New LTV Rules: How Much Loan Will You Get?

Earlier, there was no uniform LTV standard for gold loans. Most lenders loosely followed the 75% benchmark. The new RBI norms have now clearly defined slab-wise LTV caps:

• Up to ₹2.5 lakh loan: Maximum LTV of 85%

• ₹2.5 lakh to ₹5 lakh loan: Maximum LTV of 80%

• Above ₹5 lakh loan: Maximum LTV of 75%

A major change is that this LTV ratio must remain intact throughout the loan tenure. Earlier, borrowers often suffered losses when falling gold prices reduced the loan-to-value balance. The new rule prevents such situations and ensures greater financial security for customers.

Standardised Evaluation of Gold and Silver

Until now, lenders followed their own methods to assess purity and weight, creating inconsistencies and often disadvantaging borrowers. The updated rules mandate a uniform evaluation process across India.

• Assessment must be done in the borrower’s presence.

• Any deduction in purity or weight must be explained with written documentation.

• This significantly reduces the chances of miscalculation or unfair deductions.

What Counts as Valid Collateral?

The RBI has clearly defined what type of gold and silver can be used for loans:

• Only jewellery and coins made of gold or silver are permitted.

• Bullion bars (gold or silver) are not allowed.

• ETFs, mutual funds or digital gold cannot be used as collateral.

• Borrowers cannot take loans to purchase gold or silver.

• Banks and certain cooperative banks may lend against gold or silver for industrial working capital in specific cases.

Weight limits have also been specified:

• Gold jewellery: maximum 1 kg

• Silver jewellery: maximum 10 kg

• Coins: up to 50 g gold or 500 g silver

If there is doubt about ownership of the jewellery, the loan cannot be approved. Collateral cannot be pledged twice and must be stored only in branches with secure vaults. Auction rules have also been tightened, ensuring advance notice, declared reserve price and a ban on lender participation in the auction.

Silver Loan Gets Official Recognition for the First Time

While gold loans have long been a part of the formal credit ecosystem, silver loans were largely informal. With the new framework, silver is now recognised as official collateral. This is a crucial step for families who store more silver than gold and previously had limited access to formal loans.

Stronger Protection for Borrowers

With uniform rules, transparent testing, secure storage and structured paperwork, gold and silver loans have become significantly safer. Issues such as incorrect valuation, unfair deductions and arbitrary charges are expected to reduce substantially.

The new RBI framework marks a major reform, ensuring trust, transparency and financial inclusion—especially for the millions of households that rely on their jewellery to meet urgent financial needs.