How to Avail a Loan Against Fixed Deposits:

A loan against a fixed deposit (FD) is a smart way to access funds in times of need without breaking your FD and losing out on interest. This secured loan option is quick, affordable, and comes with flexible repayment options, making it ideal for emergencies or short-term liquidity needs.

What is a Loan Against Fixed Deposit?

A loan against FD allows you to borrow money by pledging your fixed deposit as collateral. You can typically borrow up to 90% of your FD’s value, and the interest rate is usually just 1-2% higher than the FD rate, making it much cheaper than personal loans.

Eligibility Criteria

●      Must be over 18 years old

●      Available to salaried, self-employed, and businesspersons

●      Minimum FD amount: ₹5,000 (may vary by bank)

●      FD should be active for at least 3-6 months

●      FD must not be a 5-year tax-saving FD or in a minor’s name

Documents Required

●      Duly filled loan application form

●      Identity proof (Aadhaar, PAN, Voter ID, Driving Licence)

●      Address proof (Aadhaar, Voter ID, utility bill, rent agreement)

●      Latest 6 months’ bank statement

●      Original FD receipt to be pledged

●      Form 15G/H (if exemption from TDS is needed)

Step-by-Step Process to Avail a Loan Against FD

1. Application

●      Visit your bank branch or log in to its online portal.

●      Fill out the loan application form with accurate details.

2. Document Submission

●      Submit the required KYC documents and the original FD receipt.

3. Loan Approval & Disbursal

●      The bank verifies your documents and processes the loan.

●      Once approved, the loan amount is credited to your account, often within hours.

4. Repayment

●      Repay the loan via EMIs or as a lump sum before the FD matures.

●      No prepayment penalty is charged; you can close the loan early without extra cost.

Features and Benefits

Feature	Details
Loan Amount	Up to 90% of FD value (varies by bank)
Interest Rate	1-2% higher than FD rate (lower than personal loans)
Processing Fee	Usually zero
Repayment Tenure	Up to FD maturity date
FD Status	FD continues to earn interest
Credit Score Requirement	Not required
Prepayment Penalty	None
Overdraft Facility	Pay interest only on amount used (if availed)

Why Choose a Loan Against FD?

●      Lower Interest Rates: Much cheaper than personal loans due to secured nature.

●      Quick Processing: Minimal documentation and fast disbursal.

●      No Impact on Credit Score: Ideal for those with low/no credit history.

●      No Need to Break FD: Continue to earn interest while accessing funds.

●      Flexible Repayment: Repay anytime before FD maturity, with no penalty.