Overdraft Against Fixed Deposit

Sometimes, you may face an unexpected financial need, from medical expenses to a business requirement, but may not want to break your fixed deposit (FD). In such cases, a loan against fixed deposit can help. It is a smart way to access instant funds while your FD continues to earn interest. A loan facility allows you to withdraw money up to a certain limit against your FD. You pay interest only on the amount you use, not the entire limit, making it a flexible and cost-effective financing option.

Access funds instantly while keeping your FD intact. Apply for a loan against fixed deposit today.

A loan against fixed deposit is a type of secured loan where your FD serves as collateral. It allows you to withdraw funds up to a pre-approved limit, typically up to 75% of your FD’s value. This arrangement ensures that your savings continue to earn interest, while you only pay interest on the amount you actually withdraw. It is ideal for short-term liquidity needs, without disturbing your investment.

Example: Suppose you have an FD worth Rs. 10 lakh. You can get a loan limit of Rs. 7.5 lakh (at 75% LTV). If you withdraw Rs. 2 lakh, you will pay interest only on that Rs. 2 lakh until it’s repaid.

A loan against fixed deposit comes with several advantages that make it one of the most convenient credit options available. Here are the key benefits of loan against fixed deposit:

• Quick access to funds: Get immediate liquidity without liquidating your FD.
• Low interest rates: Since it is a secured form of credit, interest rates are usually lower than unsecured loans.
• Pay interest only on the used amount: You are charged interest only on the funds you withdraw, not the full sanctioned limit.
• Flexible repayment: You can repay and redraw funds multiple times during the tenure, offering complete financial flexibility.
• Preserve FD benefits: Your FD continues to earn interest throughout the overdraft loan tenure.
• No foreclosure penalties: You can close the overdraft loan at any time by repaying the used amount.
• Ideal for emergencies: Useful for urgent financial needs such as medical costs, business working capital, or education expenses.

Before applying, you must meet certain loan against fixed deposit eligibility criteria. These are usually simple, since your FD acts as security for the loan:

• Deposit ownership: The FD must be held in your name or jointly (with consent from all holders).
• FD tenure: The FD should have a remaining tenure sufficient to cover the overdraft loan period.
• Age requirement: Applicants should generally be 21 years or older.
• Residential status: Only Indian residents are eligible  

Understanding how interest is calculated helps you make the most of your overdraft loan facility:

• Interest rate link: The interest on the overdraft loan is usually 1–2% higher than your FD rate.
• Usage-based interest: You only pay interest on the amount withdrawn, not the entire limit.
• Daily balance calculation: Interest is computed daily based on the outstanding overdraft loan balance.
• Repayment flexibility: Repaying the used amount early reduces interest costs automatically.
• No compound interest: Most institutions calculate simple interest, making repayment more manageable.

Example: If your FD earns 7% p.a. interest and your overdraft loan rate is 9% p.a., you will effectively pay just 2% over your earnings on the FD, making it an efficient borrowing option.

Borrow smartly at low rates with minimal cost. Apply for loan against fixed deposit now

Applying for an overdraft loan against fixed deposit is simple and quick. Here’s how you can do it:

1. Check your FD details: Ensure your FD is active, non-tax-saving, and meets the minimum tenure requirement.
2. Submit application: Apply online or at your bank branch for an overdraft loan against your FD.
3. Choose the overdraft loan limit: Based on your FD value, the lender will specify the maximum eligible limit.
4. Review terms and interest rate: Understand the applicable rate and terms before finalising.
5. Execution of agreement: Sign the necessary documents digitally or in person.
6. Link to account: The overdraft loan limit is linked to your savings or current account.
7. Start using funds: Withdraw funds as needed and repay conveniently through the same account.

While overdraft loans against FDs are cost-effective, there are some charges to keep in mind:

• Processing fee: There is no processing fee in this loan.
• Interest charges: Payable only on the amount utilised, calculated daily.
• Renewal fee (if applicable): For FDs automatically renewed, the overdraft may also be renewed with a small fee.
• Penalty for overdue payments: No penalties are there delayed repayments.
• Document or maintenance charges: Some institutions may charge small administrative fees.

Most of these charges are transparent and clearly stated upfront, ensuring no hidden costs.

Transparent terms, flexible withdrawals, and no hidden costs. Get an overdraft a loan against fixed deposit with complete clarity.

An overdraft loan against a fixed deposit is a practical and efficient way to manage short-term financial needs. It gives you the freedom to access funds instantly while your FD continues to grow. With low interest rates, easy repayment, and minimal documentation, it is a far more convenient alternative to liquidating your deposit or applying for an unsecured loan. If you are looking for a reliable, low-cost financing option that safeguards your savings and offers instant liquidity, this could be the ideal solution for you.

Keep your savings secure while accessing instant funds. Apply for an overdrafta loan against fixed deposit today.