Banks Ask RBI To Frame Policy And Guidelines For Silver Loans

Several banks have reportedly approached the Reserve Bank of India (RBI) to request a policy framework for silver metal loans that would be similar to the existing gold metal loans for borrowers.

The banks are seeking clarity on the guidelines and regulations for lending against silver as collateral.

This move comes as the demand for silver loans has increased in recent times, and banks are looking to expand their lending portfolio.

The RBI is yet to make an official statement on the matter. Over the past year, there has been a notable increase of approximately 16% in silver exports.

Indian jewelry manufacturers have been requesting banks to provide credit for the purchase of silver, silver pieces, and jewelry manufacturing due to the increase in silver exports over the past year.

The banks have raised an issue with the Reserve Bank of India during a meeting held last month. Silver exports have reached approximately Rs 25,000 crore and there is a significant demand for credit within this industry.

Silver, a highly valued metal, is primarily utilized in the industrial sector. As a result, it is influenced by developments in both gold and industrial metals.

Investments in projects to reduce carbon emissions and electrify transportation will increase over the next several years as many nations quickly transition to a greener economy.

As per current regulations set forth by the Reserve Bank of India (RBI), nominated banks have been granted the authority to import gold.

Under the Gold Monetisation Scheme of 2015, certain banks have been authorized to offer gold (metal) loans (GML) to domestic manufacturers of gold jewelry or jewelry exporters.

It has been reported that loans are being repaid in rupees, which is the same as the value of the gold borrowed. This information has been confirmed by reliable sources.

Banks have started offering borrowers the option to repay a portion of their loans in the form of physical gold. This option allows borrowers to repay their loans in lots of one kilogram or more.

According to the latest data from the Gem Jewellery Export Promotion Council (GJEPC), the export of silver jewelry has witnessed a growth of 16.02% during FY23, amounting to Rs 23,492.71 crore. This is in comparison to the previous year’s export value of Rs 20,248.09 crore.

According to a recent report by the Silver Institute, global silver demand is projected to hit a record high of 1.21 billion ounces in 2022, representing a 16% increase from the previous year.

This announcement was made earlier in the year, highlighting the growing demand for silver in various industries.

For the second year in a row, the global silver market is expected to experience a deficit, according to forecasts.

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Silver supply deficit has been on the rise over the past decade, with a gradual increase in the gap between supply and demand.

However, in 2022, the deficit experienced a sudden surge of over 300% compared to the previous year, leading to increased optimism among investors.

The demand for silver is predicted to experience a significant surge in the near future, primarily due to its utilization in the electrical circuits and interiors of electric automobiles.