In a significant move, the Reserve Bank of India (RBI) has now allowed all banks to accept gold and silver as collateral for agriculture and MSME loans even if the loan is otherwise eligible to be collateral-free. As per the latest RBI circular, if a borrower willingly offers gold or silver, banks are required to accept it. This change is expected to boost access to credit, especially in rural and small business sectors.
The RBI clarified that this move doesn’t go against the rules for offering collateral-free loans to farmers and small businesses. Instead, it’s meant to give borrowers more flexibility by allowing them to use assets like gold and silver to access credit when needed.
New RBI Rules: What Borrowers Should Know
– Gold & Silver Now Welcome as Optional Collateral
Borrowers can offer gold or silver as security for loans up to Rs 10 lakh, even if the loan qualifies as collateral-free.
– Collateral Must Be Borrower’s Choice, Not Bank’s Demand
Banks are not allowed to insist on collateral—it must be offered voluntarily by the borrower.
– Collateral-Free Loan Norms Remain Unchanged
The RBI confirmed that the core guidelines for agriculture and MSME collateral-free loans are still in place.
– No Collateral Required Under PMEGP
Loans up to Rs 10 lakh under the Prime Minister’s Employment Generation Programme will continue without any collateral requirement.
– Trusted MSEs May Get More, Without Collateral
Micro and Small Enterprises with a strong credit record may be eligible for up to Rs 25 lakh in collateral-free loans.
– Agri Loans Up to Rs 2 Lakh Still Collateral-Free
Loans for farming and allied sectors like dairy or poultry remain exempt from collateral up to Rs 2 lakh.
New Rules Apply to These Banks
The updated guidelines apply to all major banking institutions, including:
– Scheduled Commercial Banks
– Regional Rural Banks (RRBs)
– Small Finance Banks
– State Cooperative Banks
– District Central Cooperative Banks
This RBI move is seen as a win for borrowers. It supports financial inclusion and ensures that banks can’t pressure borrowers to provide collateral when it’s not required.
