Hi everyone,   

Welcome to the 178th edition of The Pattern, a weekly newsletter decoding the latest in the economy, finance, and technology.   
 
There’s a quiet shift underway in India’s lending landscape - not in interest rates or liquidity, but in what counts as collateral.  

Gold has long been India’s financial comfort blanket - a trusted hedge in uncertain times and the go-to collateral for small loans. But this week, the Reserve Bank of India (RBI) quietly changed that equation. It’s not just gold anymore. Lenders can now offer loans against silver – marking a subtle but significant shift in India’s credit ecosystem.  

The move comes as part of the RBI’s ongoing effort to deepen credit access while maintaining financial discipline. With this change, banks and NBFCs can accept silver as collateral – subject to valuation norms, purity checks, and audit trails like those that govern gold loans. 

But beneath this shiny update lies a much larger story about how India is redefining its relationship with credit and collateral. 
 
 
A new precious-metal playbook 
 
India’s appetite for silver has been climbing fast lately. 2,295 metric tonnes of silver were successfully imported in February 2024, up from 637 tonnes in January, according to trade data, and are expected to rise further this year on the back of investment and industrial demand.  
 
By making silver eligible for collateral, the RBI is doing two things at once: 
 
1. Expanding the balance sheet of inclusion- especially for rural households and traders in states like Rajasthan, Uttar Pradesh and Madhya Pradesh where silver and not gold is the household store for value.  
 
2. Creating a new layer for credit depth – giving lenders the freedom to tap an asset pool that’s largely been locked out of formal credit.  
 
Well...this isn’t about metals but about multipliers if you zoom in. Silver is a metaphor for the RBI’s broader experiment, converting a metal long considered a dormant household asset into a productive lending instrument.  

All that glitters is not gold - sometimes, it’s silver  
 
This move also fits into a broader, deliberate sequence of policy reforms over the last few months. Let’s connect the dots: 
 
1. The loan-against-share limit was raised fivefold to ₹1 crore. 
2. The IPO financing cap went up to ₹25 lakh. 
3. Working-capital loans using gold as raw material were approved for MSMEs.  
 
RBI clearly wants to move India from credit concentration (retail and consumption-heavy) to credit diversification (asset and enterprise backed). With silver in the mix, it’s clear – RBI is re-engineering. Each new form of collateral adds depth to the system, unlocking fresh lending channels without amplifying systemic risk. 

 
The logic behind the move 
 
At its core, the RBI is solving for a deeper, long-term challenge: how to expand credit without inflating risk. 
 
India's bank credit-to-GDP ratio is around 56-58%, which is notably low compared to global averages. A lower credit-to-GDP gap indicates resilience or the ability of the economy to payback debt, several Asian economies such as Japan, Korea and Hong Kong have alarming gaps at 28 per cent, 28 per cent and 18 per cent, respectively. Wider gaps signal stress in the financial system, as seen during the 2008 subprime housing crisis in the US. 
 
By formalising silver as collateral, the RBI is only trying to add another safeguard. Asset backed lending ensures verifiable value and a tangible fallback in case of default.  
 
In other words, RBI is creating a “controlled expansion loop” - letting liquidity flow into new channels but tying it back to real, traceable assets. That’s the key difference between growth and leverage.  
 
 

From gold rush to silver trust 
 
RBI seems determined to rewrite India’s credit story quietly from consumption-led borrowing to asset-led balance sheets. 
 
Between 2019 and 2023, retail loans made up more than one-third of total bank credit - a level that signalled prosperity but also rising unsecured exposure. Credit was abundant but often untethered from tangible value.  
 
Silver fits perfectly into this architecture. It’s abundant and measurable, yet widely underutilized. Its inclusion doesn’t just democratize credit; it deepens the foundation of trust on which credit stands.  
 
There’s also a behavioural shift at play. Gold loans succeeded because they felt familiar and not complex. Silver taps into that same sense of trust, but opens the door to millions of small traders, artisans, and rural households who hold silver but little gold. And if this balance holds, between access and assurance, between metal and money, India may just be entering a new kind of credit era: one built on not what glitters but endures the economy.  

 
  
Reading list 
1. Loan against silver: Not just gold, you can take loan against white metal; but what's the maximum limit for such loan? 
2. India's February silver imports hit record and set to rise 66% this year 
3. Loan against shares: Have emergency funds ready to handle margin calls 
4. RBI enhances IPO financing limit to Rs 25 lakh per investor from Rs 10 lakh 
5. RBI permits banks to grant working capital loans to manufacturers using gold as raw material 
6. India's bank credit-to-GDP ratio inches up to 56% in 2020, but still way behind peers: BIS data 
7. Private banks see steepest fall in credit growth to 9.5% in FY25: RBI 
 

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Cheers,  
Mayank