What is Silver Loan, Documents, Interest Rate 2023

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Silver loan is a type of secured loan in which the borrower pledges silver as collateral to avail the loan from the lender. Silver loans are similar to other types of secured loans, such as gold loans, where the borrower pledges gold as collateral.

In a silver loan, the lender assesses the value of the silver provided by the borrower and provides the loan amount based on the value of the collateral. The loan amount can be a percentage of the total value of the silver pledged by the borrower.

When it comes to loans and debts, people have different views and opinions. Some think of debt in a very negative way, while others view it in a very positive way. So we can say that people have strong opinion about the word ‘loan’. To put it in simple words, loan is a means through which you can get or buy something which you cannot afford at present or today.

Some people go for this option, and on the other hand, there are many who are more comfortable waiting until they can finally afford it. We are all aware of different business groups. People who work from 9 to 5 get a fixed salary every month. But there is also a profession in which you have to invest money first and then get returns. This is ‘agriculture’. It takes a lot of capital to do farming. They have to invest in various home appliances, tractors, pesticides etc.

One can buy a new machine or some people can also buy an old machine which is around 5-7 years old and in perfect condition to buy. The prices have really skyrocketed and it is not possible for everyone to afford it all. It is not only rising prices but also natural calamities like drought that affect their income. They have to face extreme conditions of rain, drought and there are times when they lose everything.

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Their main concern is raising capital. Because it is difficult to raise money even from the family’s land and equipment. This brings us to one of the best and very affordable schemes for farmers, which is the “Silver Loan”.

What is Silver Loan?

We are well aware of Gold Loan, but very few people know that they can also get a loan against their jewelry or silver coins. But not everyone is able to get a loan against their jewelry or silver coins. People who are engaged only in agriculture or agriculture related activities are eligible for silver loan.

Now, these allied activities have to be permitted under the category of allied agricultural activities by the Government of India, which is the Government of India, and the RBI, which is the Reserve Bank of India. People who are engaged in activities that meet this criteria are accepted for the silver loan.

Poultry and fisheries are under allied agricultural activities. Now we know that this loan is given only to those people who are engaged in agricultural activities, so its main purpose is to raise capital for agricultural purposes, to use the money to meet crop production requirements or expenses and This can also be used. Augmentation of assets for allied agriculture activities like dairy, poultry, fishing etc.

Now, when you opt for this loan, your agricultural requirements will be verified. The loan will be based on the scale of the financing requirements for crop production or other purposes. However, you will have to enter the required amount on the application form. Then this amount provided by you will be verified and then approved.

How many types of Silver Loan are there?

There are two types of Silver Loan –

  • Short term production credit:- This type of silver loan is given to those people who need money on short term basis. It is generally taken by farmers to meet their agricultural production requirements. Short term production credit can be given against silver loan UGC or cash credit or also in the form of short term loan. Usually the repayment time of the loan is up to one year which is 12 months or sometimes less than 12 months.
  • Term Loan:- This term loan is for a longer period of more than one year. Term loans are generally taken by people who are engaged in agricultural activities or even allied activities like poultry, fisheries, dairy etc. and planning to increase their assets or sometimes buy equipment for crop production purposes Also planning to buy. The time period of term loan is in the bracket of 36 months to 60 months. So the minimum time period for this term loan is up to three years and a person can go for a maximum of five years or so.
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People are advised to look at their requirements and then take an accurate decision to opt or choose between short term silver loan or term silver loan which best suits their needs and is most convenient for them. In most of the cases, the minimum amount of silver loan given is up to one lakh and the maximum amount given for meeting the crop production requirements is up to five lakhs. For those who want to take a silver loan, the most important thing is that the loan will be given only on pure silver jewelery and not on silver utensils or articles.

Silver loan can be repaid in three forms which are as follows-

  • Cash Credit or Overdraft:- The limit for cash credit accounts is for a period of five years on the lines of the UGC scheme. This is also subject to annual review.
  • The second type of repayment comes under demand loan. Where one can repay the loan in less than 18 months. Hence this limit is extended only up to 18 months and should not be exceeded.
  • The third and final mode of repayment is on term loan in which the time period to repay the amount taken will be fixed but this limit will not be extended beyond three years. Therefore, the prescribed limit for term loan repayment can be extended only up to a time period of 3 years.

Documents for Silver Loan

You can get a silver loan from banks or other financial institutions. For this some documents are required which are as follows-

  • Proper DNP note.
  • A letter of continuity.
  • Hypothecation of agreement.
  • Letter of general lien and set off.
  • Hypothecation of assets other than agriculture.
  • Agreement for pledge of ornaments.
  • Undertaking form borrower /Guarantor for disclosure to CIBIL and any other document stipulated in sanction.
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Before taking a silver loan, you should know about the advantages and disadvantages of silver loan. A major advantage is that you do not even need a proper credit score or a guarantor. It is most beneficial for those who have silver jewelery or coins through which they can avail several benefits like low interest rates.

Silver loan is less expensive as compared to taking a personal loan in terms of interest rates. One of the disadvantages is that the silver required must be absolutely pure silver. You will get full notice. The time period of repayment is also limited. But looking at all the points and considering everything silver loan can be a better option but one must always analyze their requirements before taking silver loan.

SBI, Bank of Baroda, Union Bank of India and many other banks offer silver loan. One should always compare the interest rates of all the available banks before applying for or taking a silver loan.


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Hello friends my name is Lokesh Nama and I am from Jaipur district of Rajasthan. From the very beginning, I like to spend time on blogging, Youtube and social media networks. For this reason, I am a professional blogger.

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