Indian Overseas Bank Loan Against FD

What is an Indian Overseas Bank Loan Against FD?

A Loan Against FD allows you to borrow funds by pledging your fixed deposit without closing it. With an Indian Overseas Bank loan against FD you continue to earn interest on your deposit, while the loan is offered at a slightly higher rate. The margin is 10% for FDs with less than 4 years of residual maturity and 15% for 4 years and above. This facility is available to individual and joint account holders with quick processing and minimal paperwork.

Key Features of the Indian Overseas Bank Loan Against FD

Here are some of the standout features of the loan against FD Indian Overseas Bank offers:

• Low Interest Rate: The loan interest rate is always 1% higher than the Indian Overseas Bank FD interest rates applicable on the pledged fixed deposit.
• Foreign Currency Loans: Loans in foreign currency are allowed for depositors or approved third parties, without a fixed limit, but with required margin rules.
• Joint Deposit Loans: Account holders can take a loan per the initial instructions if the fixed deposit is in joint names.
• Pay Interest Only on Used Amount: Interest is charged only on the portion of the loan or overdraft you use, and only for the number of days it is utilised. You do not pay interest on the entire sanctioned limit if you withdraw only part.
• For Minor’s FD: Parents or legal guardians can borrow up to ₹20,000 against a minor’s FD, but only for the child’s needs.

How to Apply for an Indian Overseas Bank Loan Against FD?

Applying for an IOB loan on FD is simple and convenient. You can choose between online and offline methods depending on your preference.

1. Online Loan Application

   You can easily apply for an Indian Overseas Bank Loan Against FD online by following these steps:

   • Log in to Net Banking: Access your Indian Overseas Bank (IOB) net banking account using your customer ID and password.
   • Go to Fixed Deposit Section: From the dashboard, navigate to the Fixed Deposit or Term Deposit section.
   • Select Loan Against Deposit: Click the option labeled Apply Loan Against Deposit to start the application process.
   • Choose FD and Loan Details: Select the FD you want to pledge and enter the desired loan amount and tenure.
   • Review and Confirm: Verify all entered details, including interest rate, repayment schedule, and processing charges.
   • Submit Request: Submit the application and wait for confirmation from the bank via SMS or email.

2. Offline Loan Application

   To apply for an Indian Overseas Bank Loan Against FD through the branch, follow these steps:

   • Visit the Branch: Go to the nearest Indian Overseas Bank (IOB) branch to initiate the loan application.
   • Carry Required Documents: Bring your Fixed Deposit receipt, valid ID proof, and address proof.
   • Request Loan Against FD: Inform the bank staff that you wish to apply for a loan against your Fixed Deposit.
   • Fill Out Application Form: Complete the loan application form with accurate personal and deposit details.
   • Bank Evaluation: The bank will assess your FD value, interest rate, and eligibility for the requested loan amount.
   • Loan Approval & Disbursement: The loan amount will be disbursed to your account as per bank norms.

Who Should Consider an Indian Overseas Bank Loan Against an FD?

A loan against fixed deposit is suitable for various individuals, especially those who want quick funds without affecting their long-term investments. Here’s who can benefit the most:

• Individuals with Short-Term Cash Needs: Suitable for covering urgent expenses like medical emergencies, travel plans, or education fees without breaking your Fixed Deposit.
• Existing IOB FD Holders: If you already have an FD with Indian Overseas Bank linked to your savings account, applying for a loan or overdraft against it is quick and hassle-free.
• Small Business Owners & Self-Employed Professionals: Useful for meeting working capital requirements or handling operational expenses at a lower interest cost.
• Borrowers Avoiding High-Cost Credit: A smarter option than expensive personal loans or credit cards.
• Investors with Tax-Saving FDs: Since 5-year tax-saving FDs cannot be prematurely withdrawn, a loan against FD lets you access funds without disturbing your investment.

Repayment Options for Indian Overseas Bank Loan Against FD

Indian Overseas Bank provides flexible repayment structures for borrowers to select an option that best suits their financial requirements. These are:

• Lump-Sum Repayment: The borrower repays the full principal amount and the applicable interest in a single payment at the end of the loan tenure. This option suits those expecting a substantial inflow of funds at a specific future date.
• EMI-Based Repayment: The loan is repaid through Equated Monthly Instalments, each consisting of principal and interest components. This method ensures consistent and manageable payments throughout the tenure.
• Interest-Only Periodic Payments with Principal at Maturity: In certain cases, the Indian Overseas Bank may allow interest repayment at regular intervals while the principal amount is settled in full at the end of the tenure.

Key Takeaways

An Indian Overseas Bank loan against Fixed Deposit offers a smart way to manage short-term financial needs without liquidating your savings. You can borrow up to 90% of your FD’s value if it matures in less than 4 years, and up to 85% for deposits with a longer maturity. The interest rate on the loan is just 1% higher than the interest you earn on your FD, making it more affordable than unsecured loans. The process is simple and quick, especially for existing customers, and lets you retain your investment while tackling urgent expenses.