Loan Against Silver: Rules, Eligibility and How It Works
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For the first time, you can now pledge silver for a loan from a regulated lender. Under the RBI (Lending Against Gold and Silver Collateral) Directions, 2025, effective 1 April 2026, silver ornaments and specific coins are accepted as collateral, alongside gold. The same tiered LTV applies: up to 85% for smaller loans, tapering to 75% for larger ones. There are weight caps, and bars and silver ETFs do not qualify. This guide explains how a loan against silver works, who can apply, the LTV limits, and how it compares with a Gold Loan from IIFL Finance.
What Is a Loan Against Silver?
A loan against silver is a secured loan where you pledge silver jewellery, ornaments or eligible coins and the lender gives you funds against their value. Your silver is stored safely and returned once you repay. It works much like a gold loan, quick to arrange, light on paperwork, and secured by the metal rather than your income. Until the new rules, mainstream banks and NBFCs rarely offered silver loans. Now they can, which opens a new option for households that hold silver rather than gold.
Eligibility Criteria for a Silver Loan
Eligibility is simple, since the silver does the heavy lifting. You must be the rightful owner of the silver and able to show a suitable ownership document or declaration. Basic KYC, such as Aadhaar and PAN, is needed. There is no strict credit score gate for a secured loan like this, though for larger loans the lender runs a credit assessment. The main limits are on the type and weight of silver you can pledge.
Accepted Silver Types and Weight Caps
Only silver jewellery, ornaments and specific coins qualify. Coins must meet a minimum purity, generally sterling standard, that is, 925 purity. Raw silver bars, biscuits and slabs do not qualify, and neither do silver ETFs or mutual fund units. There are weight caps per borrower: up to 10 kg of silver ornaments and up to 500 grams of silver coins across all your loans. These caps keep the scheme aimed at households rather than bulk traders.
LTV Limits and How Your Loan Amount Is Set
Silver follows the same tiered LTV as gold. For loans up to INR 2.5 lakh you can get up to 85% of the silver's value, 80% between INR 2.5 lakh and INR 5 lakh, and 75% above INR 5 lakh. The value is based on market-linked benchmarks the lender uses for silver, and only the metal content counts, so stones and non-silver parts are excluded. The LTV must be maintained through the loan, so if silver prices fall sharply, the lender may ask for a part-payment or a little more collateral.
|
Loan amount band |
Maximum LTV |
|
Up to INR 2.5 lakh |
85% |
|
INR 2.5 lakh to INR 5 lakh |
80% |
|
Above INR 5 lakh |
75% |
Note: All figures are indicative. Actual amounts, fees, coverage percentages, and eligibility criteria may vary depending on the lender, borrower profile, loan category, and applicable guidelines at the time of application.
How to Apply for a Loan Against Silver
The process mirrors a gold loan and is quick. In practice it runs like this:
- Take your silver ornaments or eligible coins to a lender's branch.
- The silver is weighed and its purity checked in your presence.
- You get a loan offer based on the assessed value and the applicable LTV tier.
- Provide basic KYC and an ownership declaration for the silver.
- After approval, the amount is disbursed, often the same day for smaller loans.
Silver Loan vs Gold Loan: How They Compare
The mechanics are near-identical, but there are differences. Gold is denser in value, so a small weight of gold raises more than the same weight of silver, which means silver loans tend to be smaller for a given bulk. Silver prices can also swing more, so lenders watch the ongoing LTV closely. That said, if your household holds silver rather than gold, a silver loan now gives you the same quick, secured funding route that was earlier only open to gold owners. Both follow the same LTV tiers and borrower protections.
Conclusion
A loan against silver is a genuinely new option from April 2026, letting you raise quick funds against silver ornaments and eligible coins without selling them. The same tiered LTV as gold applies, with weight caps of 10 kg for ornaments and 500 grams for coins, and bars and ETFs are excluded. If you hold gold instead, or want the larger amount gold usually supports, a Gold Loan from IIFL Finance works the same way with transparent valuation and quick disbursal.
Frequently Asked Questions
Can I get a loan against silver in India?
Yes. Under the RBI rules effective 1 April 2026, regulated banks and NBFCs can offer loans against silver for the first time. You pledge silver jewellery, ornaments or eligible coins, and the lender gives you funds against their assessed value, storing the silver safely until you repay. It works much like a gold loan. Before these rules, silver loans were rare in mainstream lending, so this is a new route for households that hold silver rather than gold.
What types of silver can I pledge for a loan?
Silver jewellery, ornaments and specific coins qualify. Coins generally need to meet sterling standard, that is 925 purity. What does not qualify is raw silver in the form of bars, biscuits or slabs, and silver-backed financial products like ETFs or mutual fund units. There are also weight caps per borrower: up to 10 kg of silver ornaments and up to 500 grams of silver coins across all your loans. Only the silver content is valued, so stones and non-silver parts are excluded.
What is the maximum LTV on a silver loan?
Silver follows the same tiered LTV as gold. Loans up to INR 2.5 lakh can go up to 85% of the silver's value, loans between INR 2.5 lakh and INR 5 lakh up to 80%, and loans above INR 5 lakh up to 75%. The value is based on market-linked silver benchmarks the lender uses, and only the metal content counts. The LTV must be maintained through the loan, so if silver prices drop sharply, the lender may ask for a part-payment or a little more collateral.
How much silver can I pledge for a loan?
The rules cap silver at 10 kg of ornaments and 500 grams of coins per borrower, counted across all your loans. These caps keep the scheme focused on households rather than bulk traders. The actual loan you get depends on the silver's assessed value and the LTV tier, not just the weight. Since silver is less dense in value than gold, a given weight of silver raises a smaller loan than the same weight of gold would.
Is a silver loan better than a gold loan?
Neither is simply better, it depends on what you hold. The mechanics are near-identical: both are secured, quick to arrange, and follow the same LTV tiers and borrower protections. Gold is denser in value, so it usually supports a larger loan for a given bulk, and its price tends to be steadier. If your household holds silver, a silver loan is now a real option. If you hold gold, or need a larger amount, a gold loan may suit better. Pledge whichever metal you actually own.
Disclaimer : The information in this blog is for general purposes only and may change without notice. It does not constitute legal, tax, or financial advice. Readers should seek professional guidance and make decisions at their own discretion. IIFL Finance is not liable for any reliance on this content. Read more
