RBI OKs Voluntary Gold/Silver for Small Loans
The Reserve Bank of India has clarified that banks and NBFCs can accept voluntary pledges of gold or silver as collateral for small loans—without violating existing rules. This applies when such loans fall within the “collateral-free” limits set by RBI. The central bank emphasised that the pledge must be fully voluntary and not coerced.
How Much Can You Borrow?
Under current norms:
- Farmers can get collateral-free loans up to ₹2 lakh.
- MSMEs can receive unsecured credit up to ₹10 lakh, extendable to ₹25 lakh with proper approval.
If borrowers want to offer gold or silver voluntarily, banks can still accept it—even within these limits.
Why This Matters
Small borrowers—especially in rural areas—often hold gold and silver as assets. They welcome this flexibility as it allows easier access to credit without losing protection under Rs 2 lakh limits. The move supports financial inclusion, giving them more options.
Rules Borrowers Should Know
- Collateral must be willingly offered.
- Lenders must verify ownership and purity.
- Gold/silver pledge cannot exceed existing norms—such as ₹2 lakh for agriculture loans.
- Strict guidelines on valuing and storing pledged assets remain in place.
Boost for Rural and Small-Business Credit
This update follows RBI’s June 2025 framework for lending against gold and silver. It brings clarity, enabling formal lenders to expand services to small borrowers. With gold loan norms already eased—including higher loan-to-value limits and no credit checks for small loans—this clarification strengthens RBI’s push toward accessible credit.
