If the property you want to pledge fulfills the bank's eligibility criteria then you can use it as collateral. Using a collateral that is not located in the city you live is possible and such instances are commonly referred to as Multi-city cases and are typically approved by most banks.
To pledge an asset located in a different city, require bank branches to coordinate with each other. The branch handling the paperwork sends a request to the branch nearest to where the property is located.