How to repay an overdraft against an FD

An overdraft against fixed deposit (FD) is a secured credit facility that allows deposit holders to borrow funds using their FD as collateral. This flexible arrangement provides quick access to liquidity without requiring premature withdrawal of the deposit. Bajaj Finserv offers this facility as a convenient way to meet short-term financial needs while ensuring that your fixed deposit continues to earn interest.

Unlike traditional loans, an overdraft against FD enables you to withdraw funds up to a specified percentage—usually up to 75% or 90%—of your deposit value. Interest is charged only on the utilised amount and for the duration it is used, making it a cost-effective solution compared to unsecured credit options.

This article provides comprehensive insights on how to repay Bajaj overdraft against FD, including available repayment methods, interest calculation, penalties for delayed payments, and tips for managing the facility efficiently. Whether you want to make regular interest payments, repay in lump sums, or track your overdraft through the FD login portal, this guide will walk you through every step. It also introduces digital convenience tools such as Bajaj online FD account opening for users interested in availing new deposits and linking them to credit facilities like overdrafts.

Understanding the repayment structure and maintaining discipline in managing this facility can help you maximise the benefits of your FD without compromising liquidity.

What is an overdraft against FD?

An overdraft against fixed deposit (FD) is a secured credit facility offered by banks and financial institutions that allows individuals to borrow funds against their existing fixed deposits. It serves as a convenient alternative to prematurely breaking an FD when liquidity is required. This facility provides a sanctioned limit—usually up to 75% to 90% of the FD value—against which funds can be withdrawn as needed.

Unlike traditional loans, where the borrower receives a fixed lump sum, an overdraft allows flexible withdrawals within the approved limit. Interest is charged only on the amount utilised and for the period it remains outstanding, making it a cost-effective borrowing option for short-term or unforeseen financial needs.

In the case of Bajaj Finserv, customers can link their FD to an overdraft account and manage the facility via online platforms. This eliminates the need for lengthy documentation and branch visits, allowing users to access funds instantly through the FD login portal. The fixed deposit itself continues to earn interest as per the original terms, so there is no loss in investment returns due to the borrowing.

Key features of an overdraft against FD include:

Secured facility: The FD acts as collateral, reducing the lender’s risk and offering more favourable terms to the borrower.

Flexible withdrawal: Borrowers can use the overdraft limit as and when required instead of receiving the entire amount upfront.

Interest on utilised amount only: No interest is charged on the unutilised portion of the overdraft limit.

No foreclosure charges: Most lenders do not levy prepayment penalties, allowing early repayment without extra cost.

Preservation of FD benefits: The FD remains intact, continuing to earn interest until maturity.

This facility is ideal for individuals looking for quick access to funds without disrupting their long-term investment goals. With the ease of digital access and competitive interest rates, an overdraft against FD offers financial flexibility backed by security.

Repayment methods for overdraft against FD with Bajaj Finserv

Bajaj Finserv offers several convenient options for repaying an overdraft facility linked to a fixed deposit. Borrowers can choose from structured methods based on their financial flexibility, preferences, and the terms agreed upon at the time of availing the facility. Here are the key repayment methods available:

Monthly interest payments
Borrowers may opt to pay only the interest accrued on the withdrawn amount each month. This keeps the principal outstanding while reducing the interest burden. It is suitable for those requiring longer repayment flexibility.

Lump-sum repayment
The borrower can repay both the principal and accumulated interest in one payment before the FD matures. This option is commonly chosen when funds become available through bonuses, business income, or other sources.

Part payments towards principal
Bajaj Finserv allows part prepayments of the overdraft. Borrowers can make multiple payments over time to reduce the outstanding balance without waiting for the loan term to end.

Repayment at FD maturity
In certain cases, the entire overdraft amount (principal and interest) may be settled upon the maturity of the fixed deposit. The deposit’s proceeds are used to close the overdraft account.

Net banking facilityCustomers can log in through the FD login portal to repay the overdraft using net banking. This method is secure, quick, and available 24/7.

UPI or payment gateway
Repayments can be made via UPI-linked apps or online payment gateways if integrated into the customer portal.

Standing instruction (SI) setup
Customers may also set up an automatic debit instruction from their savings account for periodic interest payments or principal reduction.

Cheque or demand draft
While less common today, repayments via cheque or demand draft drawn in favour of Bajaj Finserv are still accepted at designated service branches.

Mobile app payments
If the borrower uses the Bajaj Finserv app, repayment can be initiated through the overdraft account tab within the app dashboard.

Phone-based customer service
Borrowers can call Bajaj Finserv’s customer care to request support or guidance in initiating manual repayment through available channels.

These repayment methods provide flexibility in managing the overdraft and are tailored to suit varying financial needs. It is advisable to monitor repayment progress via the FD login and plan timely part or full repayments to minimise interest expenses.

Steps for repayment of overdraft against FD with Bajaj Finserv ‘Service’ portal

Other repayment methods for overdraft against FD

In addition to the core repayment options offered by Bajaj Finserv, borrowers can explore alternative channels and strategies to manage their overdraft repayments more efficiently. These methods offer flexibility and can be tailored to individual financial situations or preferences. Here are other practical repayment methods for an overdraft against FD:

NEFT/RTGS transfers from external bank accounts
Borrowers can use National Electronic Funds Transfer (NEFT) or Real-Time Gross Settlement (RTGS) to repay their overdraft from any bank account. This is useful for customers managing multiple banking relationships.

Auto debit from a different savings account
If the primary repayment account has insufficient funds, borrowers can link a secondary savings account to facilitate auto debit instructions for repayment.

EMI-based structured repayment (if offered)
Some customers may be offered a structured EMI plan to repay the principal gradually instead of repaying it in full at once. This option varies depending on eligibility and agreement terms.

Wallet-based repayments
Select digital wallets integrated with Bajaj Finserv’s payment platform may allow small repayment transactions to be initiated without logging in through a desktop portal.

QR code-based payments
In-app or email-generated QR codes can be scanned using a UPI app for instant repayment of interest or partial principal dues.

Through physical service centres
Borrowers who prefer offline servicing can visit Bajaj Finserv branches or partner locations to make payments through cheque or cash (where permitted).

Scheduled bulk repayment
This option allows scheduling a one-time large payment—usually planned ahead of FD maturity or upon receiving significant income—to close the overdraft early and reduce interest costs.

Email-based repayment instructions
In some cases, customers can send written instructions via their registered email to initiate a specific repayment amount, especially when net banking is temporarily inaccessible.

Loan management through financial advisors
Some borrowers may choose to handle repayments through authorised financial planners or representatives, who manage transactions on their behalf using a power of attorney or consent-based access.

Third-party payment integration
Borrowers using accounting or budgeting apps that support loan integrations can automate or manage repayments through connected services that work in sync with Bajaj Finserv's platforms.

Auto sweep-back from FD maturity proceeds
Upon FD maturity, the deposit amount can be auto-swept into the overdraft account, effectively settling the dues in one go.

Exploring and combining these methods can help manage cash flows and prevent late fees or penalties. Regardless of the repayment method chosen, it is important to regularly track repayment status through the FD login portal to ensure timely settlement and maintain credit discipline.

Interest calculation and repayment schedule

Understanding how interest is calculated and how the repayment schedule works is essential for effectively managing an overdraft against FD. Unlike traditional loans, the interest on an overdraft is not fixed monthly. Instead, it is calculated on a daily usage basis and billed periodically, usually every month.

Here are the key components of the interest calculation and repayment timeline:

Daily interest accrual on utilised amount
Interest is charged only on the amount withdrawn from the overdraft limit, not on the entire sanctioned limit. The rate is typically 1%–2% higher than the FD interest rate.

Floating repayment duration
There is no fixed tenure for the overdraft. It remains active until the FD maturity or until you repay the entire outstanding amount, whichever is earlier.

Monthly interest billing cycle
Interest accrued during the month is billed monthly and must be paid to avoid additional charges or penal interest.

EMI not applicable
Since this is an overdraft and not a term loan, there are no fixed EMIs. You may repay the amount in full or in parts at any time.

No prepayment penalty
Borrowers can repay the overdraft before the FD matures without incurring foreclosure or prepayment charges.

Interest compounding avoided
If interest is paid regularly every month, compounding of unpaid interest is generally avoided. Failure to pay may result in additional interest on the outstanding interest (penal charges).

Interest calculation example
If you withdraw ₹50,000 from an overdraft with an annual rate of 9%, and repay in 15 days, interest is calculated as:
Rs. 50,000 × 9% ÷ 365 × 15 = Rs. 184.93 (approx.)

Repayment schedule flexibility
You can repay in multiple instalments or in a lump sum. This flexibility allows borrowers to manage cash flows effectively.

Access to repayment historyYou can track your interest accruals, payments made, and outstanding balance via the FD login portal.

Auto debit option available
To avoid missed interest payments, borrowers can opt for an auto-debit instruction for monthly interest repayment.

Final settlement at FD maturity
If the overdraft is still active when the FD matures, the outstanding amount (principal + unpaid interest) is deducted from the FD proceeds.

Understanding how interest is calculated and when it is payable helps avoid payment delays and supports informed financial planning when using an overdraft facility.

Charges and penalties for late payment

Failing to repay the interest or principal of an overdraft against FD on time can result in additional charges. While overdrafts are more flexible than term loans, borrowers must still adhere to repayment obligations to avoid penalties. Below are the key charges and penalties associated with late or missed payments:

Penal interest on overdue amount
A penal interest rate—typically 2%–3% higher than the regular interest rate—is applied on the overdue balance until repayment is made.

Interest on unpaid interest (compound penalty)
If monthly interest dues are not paid, some lenders may charge interest on the unpaid interest, increasing the overall liability.

Dishonour charges
If a standing instruction or auto-debit for interest payment fails due to insufficient funds, dishonour charges may be applied. These charges vary but are usually fixed per instance.

Late payment fee
A flat late fee may be charged if interest payments are delayed beyond the billing cycle. This fee is separate from penal interest.

Over-limit usage penalty
In rare cases where the amount drawn exceeds the sanctioned overdraft limit, an additional penalty may be levied for overutilisation.

Impact on FD returns
Persistent non-payment may result in premature closure of the fixed deposit, with interest paid at a lower rate or penalties applied on the FD itself.

Credit profile impact
Delays in interest repayment or misuse of the overdraft facility may affect your internal credit assessment, possibly influencing future credit approvals.

Service charges for manual collection
If follow-ups are required for repayment, administrative or collection charges may be added, especially in prolonged cases of default.

Legal recovery charges
In cases of serious non-compliance, legal notices or recovery proceedings may be initiated, and related costs may be passed on to the borrower.

Reduced access to other services
Borrowers with overdue overdraft accounts may face restrictions when applying for additional services such as top-ups, renewals, or new FD-linked loans.

Account marking and internal reporting
Chronic delays may result in your account being flagged internally, which could impact your relationship with the institution.

To avoid such charges, borrowers are advised to keep track of interest due dates via the FD login portal, maintain adequate balance for automatic deductions, and consider proactive Bajaj online FD account opening planning for better liquidity management.

Tips to manage overdraft effectively

Effectively managing an overdraft against FD helps minimise borrowing costs and ensures continued access to credit without jeopardising your fixed deposit. Here are practical tips to maintain control over the overdraft facility and avoid unnecessary charges:

Withdraw only when necessary
Use the overdraft limit only for essential or short-term needs. Avoid using it for discretionary expenses to reduce interest outgo.

Track interest accrual regularlyMonitor the interest that accrues on the utilised amount through the FD login portal to avoid surprises during billing.

Repay early when possible
Since interest is charged daily, repaying the outstanding amount at the earliest will reduce the total cost of borrowing.

Opt for part repayments
Make periodic part payments towards the principal even if there is no fixed EMI. This helps reduce the interest burden over time.

Set up payment reminders or auto-debits
Use calendar reminders or activate auto-debit instructions to avoid missed interest payments or penalties.

Maintain sufficient balance in linked account
Ensure there is always enough balance in the linked bank account to cover interest deductions and avoid dishonour charges.

Avoid exhausting the entire limit
Keeping some margin within the overdraft limit provides a safety cushion for emergency needs and helps in maintaining financial discipline.

Review repayment history monthlyLog into your FD login to check your repayment history and ensure that all payments are being processed accurately.

Use surplus funds for part prepayment
Apply any windfalls—like bonuses or investment returns—towards reducing the overdraft amount. This limits future interest liability.

Align overdraft with short-term financial planning
Consider how the overdraft fits into your overall cash flow. Plan repayments based on upcoming income to avoid over-dependence.

Know the interest structure
Understand the daily interest calculation model. Knowing that interest compounds on usage helps reinforce disciplined utilisation.

Avoid converting overdraft into a long-term loan
Overdrafts are meant for short-term liquidity. Prolonged use may lead to high cumulative interest. Repay quickly when funds are available.

Stay informed about charges and policies
Review applicable penalties, changes in interest rates, and repayment terms periodically to stay compliant.

Consider Bajaj online FD account openingWhen planning for future liquidity needs, open a new FD with Bajaj Finserv and link it for overdraft eligibility without breaking existing deposits.

By following these tips, borrowers can manage their overdraft effectively, avoid extra charges, and ensure continued access to secured credit without compromising the benefits of their fixed deposits.

Conclusion

An overdraft against FD offers a practical and secure way to access funds without breaking your fixed deposit. When used judiciously, it provides flexibility to meet short-term financial requirements while your FD continues to earn interest. However, like any credit facility, managing it responsibly is crucial to avoid unnecessary interest costs, penalties, or disruptions in repayment.

Understanding the repayment structure, interest calculation, and available repayment methods is essential. Whether you choose to make monthly interest payments, part prepayments, or repay the overdraft in full, timely action can significantly reduce your borrowing cost. Tools like the FD login portal allow you to track usage, monitor interest dues, and manage repayments efficiently.

Additionally, forward planning—such as exploring Bajaj online FD account opening for future credit eligibility—ensures uninterrupted financial support when needed. With the right approach, an overdraft against FD can be a cost-effective and reliable solution, supporting your financial needs without compromising long-term savings.

Internal Linking —

Anchor Text - bajaj online fd account opening

Anchor Link - https://www.bajajfinserv.in/new-fd-account-update-time

Anchor Text - fd login

Anchor Link - https://www.bajajfinserv.in/service-guides/manage-your-fixed-deposits-in-my-account