loan against silver, Avail loan on your idle silver

Every time people ask me ” can we get loan on silver ?” and “Loan against Silver”

My answer for these queries is “Why not !”

Silver also have a value. Valuations of silver is almost same as gold or other precious metals

Even price of Silver was 72000 rupees per kg in 2008, which was three times against Gold price, which was 16000 per gram that time.

In India very few financial institutions are providing loan against silver.

Loan against silver is also available through various public and private sector institutions

How lender value Silver for taking loan against silver?

Bank calculate the value of Silver at standard rate, which India bullion and jewellers association (IBJA) announce each day. Banks or pawn broker takes a haircut of 40-60 % on the market value of Silver for providing loan.

Forms & Documents for loan against silver

KYC (Know your customer) is the primary requirement for availing any type of loan from banks. Further following are the requirements.

  1. Appropriate DPN note.
  2. Letter of continuity.
  3. Hypothecation of agreement.
  4. Letter of general lien and setoff.
  5. Hypothecation of assets other than agriculture.
  6. Agreement for pledge of silver ornaments.
  7. Undertaking from borrower /Guarantor for disclosure to CIBIL.
  8. Any other required document mentioned for a sanctioning loan against silver.

Eligibility for loan against silver

Any person engaged in agriculture or allied activities and persons engaged in activities permitted by GOI /RBI to be classified under agriculture. The applicant should satisfy the KYC guidelines & Lender will give loan based on declaration. Additionally, proof of pursuing the activity with the amount of loan to be given for loans above Rs 1 lakh.

Type of Loan

There are two types of loans against Silver

(i) Short Term Production Credit. Loan seekers can avail short term Production credit as a UGC/Cash credit/Short-term loans (tenability/tenor for a period up to one year).

(ii) Term loans: Loan seekers can avail loan as short-term loan for a tenure from 36 to 60 months depending upon the purpose.

Purpose of the loan [loan against silver]

Generally, RBI made provision of bullion loans to meet any unexpected requirement of rural or unsalaried peoples. Agriculture Silver loan is for meeting crop production expenses and/or for creation of assets to be used in his/her farming operation or for allied agricultural activities like diary, poultry fisheries etc and Agri related activities.

You can read more on How to avail easy loan

Quantum of Loan against silver

  • The purpose of loan can be for anyone/variety of purposes for meeting the farm activity related expenses including that for allied activities.
  • Lender will do loan assessment on the scale of finance for crop production and actual credit requirement of farmers for other purposes. However, this shall be based on the declaration of the farmers in the application form.
  • Lender will extend the loan against silver only against pure silver jewellery and not against silver vessels / articles, etc
  • Maximum amount which lender provide for a loan against silver is Rs.5.00 lacs

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