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People can take loans against fixed deposit as it offers the following benefits:
- Lower interest rates compared to other types of loans like personal loans (0.5% – 2% above the FD rate)
- You don’t have to break the FD: You don’t have to break the FD and go for a premature withdrawal. Thus, you would not lose interest on your FD.
- No processing fees
- Loan against deposit can be availed against domestic and NRI FDs
- There is an option to repay it as a lump sum or in installments (Should not exceed the tenure of the FD).
- Flexible loan repayment period
- Seamless application process
- No prepayment charges
- No credit score requirement
- Nearly zero documentation
FD as Collateral/Security
Banks pledge a customer’s FD as collateral when taking a loan against Fixed Deposit. This makes the loan secured and thus the interest charged for the same is reduced. If the borrower does not pay the loan amount, the bank can conveniently procure it from the FD amount. Usually, this amount is settled at the time of maturity.
Loan Against FD of Top Banks: Features
|
Bank |
Interest Rate |
Loan amount |
Processing Charges |
Repayment Tenure |
|
ICICI Bank |
At the bank’s discretion |
Up to 90% of the FD value |
Nil |
Remaining tenure of the FD |
|
Yes Bank
|
1% higher than the maximum fixed deposit interest rate |
Up to 90% of the FD value |
Nil |
Remaining tenure of the FD |
|
State Bank of India |
At the bank’s discretion |
Up to 85% of the FD value |
Nil |
Remaining tenure of the FD |
|
Axis Bank |
2% higher than the prevailing interest rates |
Up to 85% of the FD value |
Nil |
Remaining tenure of the FD |
|
RBL Bank |
2 to 3% higher than the prevailing interest rates |
Up to 90% of the FD amount |
Nil |
Remaining tenure of the FD |
|
Union Bank |
2 to 3% higher than the prevailing interest rates |
Up to 90% to 95% of the FD amount |
Nil |
Remaining tenure of the FD |
|
Citi Bank |
At the bank’s discretion |
Up to 90% of the FD amount |
Nil |
Remaining tenure of the FD |