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    Loan against Fixed Deposit

    One can easily get a loan against their FD even if you do not have a credit score or meet the income eligibility criteria to apply for a loan. One of the main advantages of holding a Fixed Deposit (FD) is that it comes with a loan/overdraft facility. The bank will issue you a loan against your term deposit by using it as a collateral. Apart from this, the interest rate charged for loans taken against your term deposit will be much less when compared to traditional loans, where the interest rate charges are comparatively much higher. FD is one of the most popular types of investment options in India because it offers numerous advantages. Many banks in India offer loans against FDs including State Bank of India (SBI), HDFC Bank, ICICI Bank and Axis Bank, among other banks. Loans can be obtained on both domestic and NRI FDs.

    So, if you are looking for a loan to meet some financial emergency? Consider taking one using your FD and avail multiple benefits such as lesser interest rate, waiver on processing fee, among other benefits. Let us understand more about how to apply for a loan against FD, how banks grant such loans and the various benefits of opting for such a method.

    Apply for Fixed Deposit

    How do banks grant loans against FDS?

    Banks usually consider this type of loan as a demand loan or an overdraft. So, the loan is basically given in the form of an overdraft.

    Interest rates on loans against FD

    The interest rates charged for these types of loans are much less when compared to traditional loan interest rates. So the interest rate charged is just around 2% to 3% more than the FD interest rate. For example, if you are earning an interest rate of 6% on your time deposit, the loan will granted at the rate of around 8%. This is much lesser than your average loan interest rate that usually ranges from around 9% to 15% or even more depending from bank to bank.

    Amount of loan that is granted against FD

    Most banks grant around 70% to 90% of the total FD value as a loan. For example, if you have a time deposit for Rs.5 lakhs, you can avail 90% of it as a loan, which will work out to be Rs.4,50,000. You can still continue to earn interest on the remaining Rs.50,000 even after the loan is granted.

    Benefits of Car Loan against Fixed Deposit

    Loan tenure and payment procedure

    The period for which the loan is taken should ideally be the same as the tenure of the FD. It is possible to take the loan for a tenure that is lesser than the FD tenure. However, the tenure cannot be more than that of the time deposit tenure. For example, if the tenure of your term deposit is 10 years, the loan tenure can range anywhere between 1 year and 10 years. However, it cannot be more than 10 years.

    Foreclosure charges for Loan on Fixed Deposit

    Most banks in India do not avail any type of foreclosure charges if the customer closes the loan earlier than the said tenure.

    Loan against domestic FD

    There are many banks in India that offer loans against domestic term deposits. These loans are offered to all Indian residents with minimal documentation.

    Loan against NRI FD

    Non-Resident Indians (NRIs) who invest in various NRI term deposits such as Non-Resident External (NRE), Non-Resident Ordinary (NRO), and Foreign Currency Non-Repatriable (FCNR) deposits, can also apply for a loan against their respective time deposits. There are many banks in India that offer this facility.

    Thinking to Get Personal Loan against Fixed Deposit. Get more information here: Personal Loan against Fixed Deposit

    How to apply for a loan against your FD online

    • Step 1: Log on to your bank portal and login to internet banking by keying in username and password
    • Step 2: Go to the fixed deposit option and click on ‘Overdraft against FD’ option
    • Step 3: Fill in relevant details like how much loan you want to avail, the tenure, etc and submit the application
    • Step 4: The loan will be approved online and you will get a notification in this regard through email and SMS

    How to repay the loan taken against FD

    Many banks offer flexible repayment options and customers can pay regular EMIs. You can also pay in a lump sum if you have funds available and the bank will not penalize you for settling the loan early.

    Documents required to apply for a loan against FD

    Since the bank already has the documents that you are already a customer, the application process will be hassle-free, quick and fast when compared to a regular loan approval. The only documents required are the FD receipt and the loan application form.

    Benefits of availing loan against FD:

    • Lower interest rate: To put it simply, it is much more economical to take a loan this way using your FD because you will be paying a much lesser rate of interest. This way, the cost of your loan is much cheaper than a regular loan.
    • No processing fee: In most cases, there is no kind of processing charge for availing a loan through this method. This is a great because it will help you reduce the overall cost of the loan.
    • Hassle-free application process: Applying for this type of loan is very easy, requires very less documentation and is sanctioned faster. The application process is very user-friendly and many banks allow customers to apply online without any hassle.
    • No need to break FD: The best part of applying for a loan this way is that you can get a loan sanctioned and at the same time continue to earn interest on the FD.


    No. Feature Information
    1. Eligibility All customers, single and joint account holders
    2. Amount of loan 70% to 90% of deposit amount
    3. Security/collateral Existing time deposit/FD
    4. Repayment period Should not exceed the tenure of the FD
    5. Type of loan Demand or overdraft
    6. Channels to apply Internet banking and branches
    7. Processing fee Nil
    8. Interest rate Around 2% to 3% higher than FD rate in most cases


    1. Can minors apply for a loan against FD?
    2. No. Only account holders above the age of 18 with a valid FD can apply for a loan.

    3. Can joint account holders also apply for a loan against FD?
    4. Yes. These type of account holders will have to visit the bank branch and apply for the loan.

    5. What will happen if the account holder does to make payments towards the loan?
    6. In such a case, the bank will use money in the term deposit to adjust the payment against the loan that is availed.

    7. Should both the joint account holders sign on the loan document?
    8. Yes, this is the process for joint account holders.

    9. Is it possible to apply for a loan against a tax saving fixed deposit?
    10. No. This facility is not available when it comes to tax saving FDs.

    11. Is it true that joint account holders cannot apply for a loan against FD online?
    12. Yes. Those holding a joint account will have to visit the bank branch to initiate the loan application process.

    13. What is the maximum and minimum amount of loan that a customer can get under this facility?
    14. The maximum amount depends on the FD amount. The maximum loan you can get is 90% of the total value of the term deposit.

    15. Is it possible to make repayment through EMI options on FDs?
    16. Yes. This is especially true for preferred or long-term customers on most cases. Banks might also offer certain special offers.

    17. Can I break the FD or close it prematurely during the loan tenure?
    18. No. This will not be possible until you settle your loan.

    19. Can I first open an FD and the apply for a loan on it?
    20. Yes, this is possible.

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