Personal Loan Against FD

Fixed Deposit (FD) allows an individual to save a lump sum of money while earning high returns at fixed interest rates. Besides increasing your savings, many banks also facilitate personal loan against FD. The banks generally offer short-term loans at low rates of 1-2% p.a. above fixed deposit interest rates.

Returns as high
as 7.5%^*

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Completely Tax free⁺

Maximum returns Offered by Guaranteed

Highest

7.5%^*

Guaranteed Plan

(by insurance companies)

(10 Years)

6.5%^**

Fixed Deposits

(by SBI bank)

(5-10 Years)

7.1%^***

Public Provident Fund

(other popular options)

(15 Years)

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58.9 Million

Registered Consumer

Insurance Partners

26.4 Million

Policies Sold

Let us learn more about personal loan against FD that top banks in India offer.

What is a Personal Loan Against FD?

A personal loan against FD is a financial facility that allows an individual to keep their Fixed Deposit as collateral to raise money. This helps the customers to get urgent funds for the short/medium-term, depending on their Fixed Deposit (FD) tenure.

You can take a personal loan against FD for medical treatment, home renovation, or a wedding. The facility helps in keeping the savings intact while raising money to meet emergency expenses.

Comparison Between

Fixed Deposits, Guaranteed Return Plans & Debt Mutual Fund

Guaranteed Return Plans, Fixed Deposits &
Debt Mutual Fund

Guaranteed Return Plans

Returns Before Tax

7.5% ^(TAX-FREE)

Returns After Tax

7.5%

Guaranteed Returns

Yes

Life Cover

Yes

Tax on Profit

Tax Free*

Risk

No Risk

Still Better than FD’s and Debt Mutual Fund

Fixed Deposits

Returns Before Tax

7% ^(TAXABLE)

Returns After Tax

4.8%

Guaranteed Returns

Yes

Life Cover

Tax on Profit

Taxable

Risk

Low Risk

Debt Mutual Fund

Returns Before Tax

8% ^(TAXABLE)

Returns After Tax

5.5%

Guaranteed Returns

Life Cover

Tax on Profit

Taxable

Risk

High Risk

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*For annual premium upto ₹5 Lacs

Features of Personal Loan on FD

Let us learn the important features of the facility of personal loan against FDs in the list below:

Loan Amount: Get loans of up to 90-95% of Fixed Deposits value
Overdraft Facility: Both facilities of personal loan and overdraft against FD are provided
Interest Rates: Avail loans at low-interest rates i.e. generally, 1% over the FD interest rates
Fees & Charges: Less to no loan processing fees or charges
Penalties: Zero penalties on pre-payment of loan
Channels to Access Facility: Internet banking/ bank apps/ physical branches
Loan Repayment: Flexible loan repayment options e.g. in a lump sum or periodic instalments on a monthly/ quarterly/ annual basis
Credit Card: Banks also offer credit card facilities on your FD funds

Documents Required to Get Personal Loan on FD

Let us learn the list of required documents to avail of a hassle-free loan against fixed deposits:

Application form for the loan on FD
Fixed deposit receipts
Letter of pledge/ lien
KYC verification documents
Cancelled cheque, in case of non-cumulative FD
Overdraft facility agreement
Pledge of loan repayment

Top Banks Offering Personal Loans on Fixed Deposit

Here is a list of the top banks that offer personal loans against fixed deposits at attractive interest rates:

Bank Name	Loan @ Interest Rate (In % p.a. above FD interest rates)	Maximum Limit of Loan Against FD (in % of FD Amount)	Minimum Limit of Loan Amount
State Bank of India (SBI)	1% above	95%	Rs. 5000- Rs. 5 crores
Punjab National Bank	0.75% above	90%	Rs. 25000- Rs. 5 crores
HDFC Bank	2% above	90%	Rs. 25000
Yes Bank	1% above	90%	Rs. 10000- Rs. 2 crores
Axis Bank	2% above	85%	Rs. 25000

Premature FD Withdrawal vs Personal Loan Against FD

The difference between taking a personal loan on FD and premature liquidation of an FD account is tabulated below:

Partial Withdrawal on FD	Personal Loan on FD
Lending institutions charge penalties on a premature withdrawal from FDs The penalty is charged at the rate of 0.5-1% p.a. of the FD amount. You can calculate the amount using FD premature withdrawal penalty calculator.	No charges or processing fees on taking a loan against fixed deposits

Standard Personal Loan Vs Personal Loan Against Fixed Deposit

Let us understand how a separate personal loan is different from a personal loan on fixed deposit in the following table:

Standard Personal Loan	Personal Loan Against FD
High-interest rates are charged Loan raised on unsecured collateral Interest rates: 8-15% p.a.	Low-interest rates are charged Loan raised on secured FD amount Interest rates: 5-9% p.a.

FD interest rates India have fallen consistently over the last 12 years.

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Benefits

Personal Loan on FD is a beneficial facility towards strengthening your financial planning, considering the reasons below:

Emergency Funds: Helps resolve immediate financial liquidity crunch
Low-Interest Rates: Cheaper interest rates as compared to standard personal loans
Overdraft Against FD: Banks also allow overdraft facility of a loan on FD amount
No Fees/ Penalties: Generally, banks do not charge penalties and other fees for this facility
Prevents Premature Liquidation of FD: Individuals need not break their FD or lose interest returns on their FD funds
Minimal Paperwork: The applicant has to undergo only a fast and easy documentation process

Points to Consider Before Taking Personal Loan Against FD

Consider the points mentioned below before raising a loan against FD:

Both joint and single-life accounts can avail of a loan on fixed deposits.
Minors are not eligible to get a loan on FD.
Loan facility is not available with 5-year tax-saving FDs.
For a Joint Life account, both the joint policyholders will be liable to repay the loan.
Consider household income and expenses, before raising a large loan amount.

Wrapping It Up

Banks offer personal loans on Fixed Deposits to their customers at attractive interest rates. However, maintaining financial prudence is crucial to not distort your financial planning and create a stressful situation for your family. Besides, you must always consider your loan repayment capability before taking an overdraft against your FD.

Bank FD Interest Rates

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Assam Gramin Vikash Bank FD Interest Rates

AU Small Finance Bank FD Interest Rates

Axis Bank FD Rates

Bajaj Finance FD Interest Rates

Bandhan Bank FD Interest Rates

Bangiya Gramin Vikash Bank FD Interest Rates

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Maybank Singapore FD Rates

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FAQs

Can we take a personal loan against FD?

Yes, an individual can raise a personal loan against FD for their Joint or Individual Life account. FD accounts in the name of minors are not applicable for a loan on FD.
How much personal loan can I get against FD?

Generally, the loan overdraft against FD between the ranges of Rs. 25,000- Rs. 5 crores is provided to the customers. Note that the limit of personal loans against FD varies as per the particular bank.
Is a loan against FD better than a personal loan?

Yes, a loan on FD is a better option than a standard personal loan facility provided by lending institutions. Loan against FD offers an overdraft facility at cheaper interest rates of between 0.75-2% p.a. more than FD interest rates.
What is the interest rate of a loan against FD?

Various banks offer a loan on Fixed Deposits at low-interest rates, which is between 0.75%-2% p.a. higher than the FD interest rates. Generally, this interest rate of a loan against FD is around 5-9% p.a.

* Applicable for Titanium variant of Max Life Smart Fixed-return Digital (Premium payment of 5 years, Policy term of 10 years) and a healthy male of 18 years old paying Rs. 30,000/- monthly (exclusive of all applicable taxes)

** Fixed deposit rate applicable for 5 year's 1 day to 10 years for investment amount less< 2 Crore ( Not for senior citizens).

*** PPF interest rate applicable for 15 years for investment amount upto 1.5 Lac

+ Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023

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