RBI Allows Gold, Silver as Collateral for SME Loans Up to Rs 20 Lakh

• RBI clarifies banks can accept gold/silver as collateral for MSE loans up to Rs 20 lakh if voluntarily pledged.
• This does not violate mandatory collateral-free lending norms for micro and small enterprises.
• The amendment applies to loans sanctioned or renewed on or after April 1, 2026.
• Small businesses without traditional collateral can now use household gold/silver, improving credit access and potentially reducing costs.
• Banks benefit from reduced credit risk and improved asset quality, while collateral-free lending up to Rs 20 lakh remains a borrower right.