📄 Source: Reserve Bank of India · RBI/2025-2026/66
Quick answerScheduled Commercial Banks can consider loans against voluntary pledge of gold and silver as collateral for agriculture and MSME loans up to collateral free limit.
What changed
RBI clarifies that loans against voluntary pledge of gold and silver as collateral by borrowers will not be considered a violation of guidelines.
Reference is made to the Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025.
The clarification applies to Scheduled Commercial Banks (including Small Finance Banks).
What it means for you
This clarification allows banks to consider loans against gold and silver collateral for agriculture and MSME loans without violating RBI guidelines.
It provides flexibility to banks in lending to these sectors.
The rule, in the simplest words
Banks can give loans to farmers and MSMEs using gold or silver that the borrower voluntarily gives as a pledge, as long as the loan is within the collateral‑free limit (the amount of money that can be lent without needing other collateral).
Doing so is not a violation of RBI guidelines – the RBI says it is allowed.
This rule applies to Scheduled Commercial Banks and Small Finance Banks.
Regional Rural Banks, State Co‑operative Banks and District Central Co‑operative Banks are not covered by this rule.
Banks should review their lending policies, update them if needed, and inform borrowers and staff about this change.
How it plays out — a real example
Ms. Sharma, a gold‑loan officer in Indore, helps a farmer borrow ₹5 lakh for irrigation. The farmer gives a gold necklace as a voluntary pledge. Ms. Sharma checks that the pledge is within the collateral‑free limit and records it, knowing that RBI says this is perfectly fine.
What you must do
Review existing lending policies to ensure compliance with RBI guidelines.
Consider revising lending policies to include loans against gold and silver collateral for agriculture and MSME loans.
Communicate changes to relevant stakeholders, including borrowers and internal teams.
Who it affects
Scheduled Commercial Banks, Small Finance Banks, Borrowers in agriculture and MSME sectors
What is the purpose of this clarification?
To provide flexibility to banks in lending to agriculture and MSME sectors by allowing loans against gold and silver collateral.
Which banks are affected by this clarification?
Scheduled Commercial Banks, Regional Rural Banks, State Co-operative Banks, and District Central Co-operative Banks.
📜 Read the original circular — full text as issued by RBI
RBI/2025-2026/66
FIDD.CO.FSD.BC.No.08/05.05.010/2025-26 July 11, 2025
The Chairman / Managing Director / Chief Executive Officer
All Scheduled Commercial Banks
(including Regional Rural Banks and Small Finance Banks)
All State Co-operative Banks and District Central Co-operative Banks
Madam/Sir,
Lending Against Gold and Silver Collateral - Voluntary Pledge of Gold and Silver as Collateral for Agriculture and MSME Loans
Please refer to our circular FIDD.CO.FSD.BC.No.10/05.05.010/2024-25 dated December 6, 2024 on Credit Flow to Agriculture – Collateral free agricultural loans, and Para 4.1 of the Master Direction FIDD.MSME & NFS.12/06.02.31/2017-18 dated July 24, 2017 on Lending to Micro, Small & Medium Enterprises (MSME) Sector (Updated as on June 11, 2024) 1 .
2. Reference is also invited to the Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025, DOR.CRE.REC.26/21.01.023/2025-26, dated June 6, 2025 .
3. In this regard, it is clarified that loans against voluntary pledge of Gold and Silver as collateral by borrowers, sanctioned by the banks upto the collateral free limit, as covered under the Circular / Master Direction referred to in para 1 above, will not be construed as a violation of the above-mentioned guidelines as regards such collateral.
Yours faithfully,
(R Giridharan)
Chief General Manager
1 Not applicable to Regional Rural Banks, State Co-operative Banks and District Central Co-operative Banks
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2025-2026/66 · issued 11 Jul 2025. The plain-English explanation above is BankPulse’s own independent summary.
Test yourself
Quick self-check built only from the facts already on this page — tap a question to reveal the answer.
Q1. In one line, what does this circular do?
Scheduled Commercial Banks can consider loans against voluntary pledge of gold and silver as collateral for agriculture and MSME loans up to collateral free limit.
Q2. Who does this circular apply to?
Scheduled Commercial Banks, Small Finance Banks, Borrowers in agriculture and MSME sectors
Q3. What is the first thing you should do about it?
Review existing lending policies to ensure compliance with RBI guidelines.
Related circulars · Financial Inclusion & Priority Sector
Consider revising lending policies to include loans against gold and silver collateral for agriculture and MSME loans.
📜 Compliance
Review existing lending policies to ensure compliance with RBI guidelines.
Communicate changes to relevant stakeholders, including borrowers and internal teams.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (Scheduled Commercial Banks, Small Finance Banks, Borrowers in agriculture and MSME sectors), your first concrete step on “Voluntary Pledge of Gold and Silver as Collateral” is: “Review existing lending policies to ensure compliance with RBI guidelines.” (RBI issued this 11 Jul 2025).
Circular: RBI/2025-2026/66 -- Voluntary Pledge of Gold and Silver as Collateral
Issued: 11 Jul 2025
Action required: Review existing lending policies to ensure compliance with RBI guidelines.
Action required: Consider revising lending policies to include loans against gold and silver collateral for agriculture and MSME loans.
Action required: Communicate changes to relevant stakeholders, including borrowers and internal teams.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
AI-drafted · AI fact-check pending · under the editorial review of our expert review panel · decoded & published by BankPulse · 06 Jul 2026, 13:08 IST
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12881&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert review panel. Independent platform, not affiliated with the Reserve Bank of India; never reproduces RBI text verbatim.
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