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Loan Against FD

Updated on: 18 Jan 2024 | 10 min read

Fixed deposits are investment avenues that allow you to save for a fixed tenure and get a predetermined interest rate. While you can invest your savings in a fixed deposit scheme, what would you do if you need funds in an emergency? Most people think of taking loans. However, sometimes availing of a loan can get tricky due to multiple reasons like delay in process, documentation, low credit score, etc. Some people break their FD accounts for immediate cash flow during emergencies. It leads them to pay a penalty on the promised FD returns. Instead of losing money in paying penalties, you can take a loan against your FDs instead. Taking a loan against your FDs can give you funds against your existing deposits to meet your financial needs quickly.

Let’s understand what a loan against FD means and its different aspects.

What is a Loan against FD?

A loan against FD is a credit facility banks offer as a loan against your existing fixed deposit account. Rather than withdrawing your fixed deposit prematurely and paying penalty fees, you can avail of this secured loan at an affordable interest rate. While some banks offer upto 90% of the FD amount as a loan, the amount varies from bank to bank.

Top Banks Offering Loans Against Fixed Deposit

Bank NameInterest RateLoan amount
Axis Bank2% above term deposit rateRs.25,000 onwards
State Bank of India1% above the relative FD rateRs.25,000 to Rs.5 crore
HDFC Bank2% above the FD rateUp to 90% of your fixed deposit
Federal Bank2% above the FD rateUp to 90% of the deposit amount
Karur Vysya Bank5% to 7%Up to 90% of the deposit amount
Deutsche Bank2% above the FD rateRs.25,000 onwards

Note: Banks do not offer loans against FD benefits to the investors of 5-year tax-saving FDs

Features of Loan Against FD

  • The loan is offered on the amount deposited, not the amount you will receive on maturity.
  • The loan against the FD interest rate is usually 1% or 2% above the fixed deposit interest rate. For instance, if your fixed deposit offers an interest rate of 6%, the loan interest rate would be 7% or 8%, as determined by the bank. However, this rate is still typically lower than personal loan interest rates. 
  • The tenure of a loan against fixed deposit is either the same or less than that of the fixed deposit. For example, if the tenure of your fixed deposit is 6 years, the loan can be either less than or equal to 6 years but can be at most that.
  • Since the loan is offered against an existing deposit, your credit score isn’t given much importance. So, even with a low or no credit score, you can get this loan.
  • Prepayment is also allowed, wherein you can pay off a loan early to reduce the interest burden. Further, many banks do not charge any fees on loan foreclosure. Loan foreclosure is the full repayment of your remaining loan amount in one single payment instead of paying multiple EMIs.
  • The maximum amount for a personal loan is determined by factors such as credit score, income, repayment schedule, etc. But when you avail a loan against an FD, the maximum loan amount is determined by the amount of money in your FD account. This means you will be eligible for a larger loan with a higher FD amount.

How to Avail a Loan Against FD?

You can avail of a loan against FD in the following ways:

  • Offline Channel

You can visit the nearest branch of your bank, where you maintain a fixed deposit account. You can complete the loan application form and submit it with your fixed deposit receipt. As the bank already has your KYC formalities updated from when you opened your FD, the documentation required for a loan against your FD will be minimal.

Once the branch verifies your application and documents, they will sanction the loan.

  • Online Channel

You can also get the loan through the bank’s website. Log into your net banking account, choose the deposit scheme against which you want the loan and apply. Fill out an online application form and submit your documents. The bank will issue the loan once your application and documents are verified.

  • Mobile App Channel

Many banks have launched mobile applications that help you track your accounts and investments. You can download your bank’s mobile app and apply for a loan from the app itself. Just fill out a simple application form and upload your documents. The bank would verify your details and sanction the loan on a fixed deposit.

Eligibility Criteria for Availing Loan Against FD

Usually, the eligibility parameters depend on the bank with which you apply for the loan. However, some of the common eligibility parameters are as follows:


Eligibility parameterRequirement
AgeYou should be an adult – 18 years or above – to apply for the loan. Usually, lenders allow loans at a minimum age of 21, but the minimum age criterion might vary. 
Fixed DepositYou must hold a FD with the bank you are applying for the secured loan.There is also the requirement of a minimum deposit amount against which you can get the loan. This minimum amount differs in each bank. The loan is available both against individual FDs and joint FDs.
Type of borrowerLoans are available to official residents of India, Hindu Undivided Families (HUFs), trusts, associations, societies, sole proprietorship businesses, companies and partnership firms.
Tax-saving FDsLoans are not available against 5-year tax-saving fixed deposit accounts.

Benefits of Loan Against FD

  • Credit Score Not an Obstacle: Forget credit hassles! You can access cash against your fixed deposit (FD) regardless of your credit score.
  • Unlock Up to 95% of Your FD: Banks typically offer generous loans, providing up to 90-95% of your FD amount.
  • Enjoy Lower Interest Rates: Breathe easy with competitive rates! FD loans often boast interest rates lower than personal loans or credit cards, typically just 0.5%-2% higher than your FD's interest rate.
  • NRIs can also avail: Even if you're an NRI, you can leverage your NRE/NRO FDs for loan access.
  • Hassle-Free Process: Say goodbye to mountains of paperwork! Most banks offer smooth loan applications with minimal documentation, and some even have online options through net banking.
  • Flexible Repayment: Choose how you repay, either fixed instalments or a lump sum. Remember, the loan must be repaid within your existing FD's tenure (it piggybacks on that timeframe).

Risks of Loan Against FD

  • Collateral Caution: Your FD acts as collateral for the loan. Failure to repay could result in the bank seizing your FD and forfeiting your accrued interest.
  • Limited Tenure: This loan's duration is tied to your FD's maturity date. If your FD matures in nine months, that's your loan's maximum term.
  • Reconsider if you are unsure of repayment: If you need more certainty about your ability to repay the loan on time, explore other options. Defaulting can damage your credit score and cost more than premature withdrawal penalties.


If you face an emergency, like a medical crisis, a loss of job, or any other financial obligation, you can avail of a loan against FD and get the funds to fulfil your needs. The loan has affordable interest rates and allows the overdraft facility wherein you pay interest only on the borrowed amount.
However, getting a loan against a fixed deposit depends on your fixed deposit. So, if your deposit is low, you might not get funds as needed. Other than this, the loan offers easy financing for your needs.


What is the interest rate charged for a loan against FD?

The interest rate varies across banks; it is usually 1% to 2.5% above the interest rate offered on the fixed deposit account.

Can senior citizens apply for a loan against FD?

Yes, senior citizens can apply for a loan against FD if they have a deposit account with the bank.

What are the charges to be paid against the loan against the fixed deposit?

Usually, no additional charge is payable for the loan against FDs. Most banks do not even charge a processing fee.

What happens if I cannot pay the EMIs towards my loan against FD?

If you cannot pay the EMIs, the bank will realise the outstanding loan amount by liquidating your fixed deposit.

Can I close my FD before my loan tenure ends?

No, you cannot. The loan is granted against the security of the fixed deposit account, which gives the lender the right to utilise your fixed deposit investment if you default on the loan. As such, till the loan is fully repaid, you cannot close your FD. However, if you have prepaid the loan before the tenure is complete, you can close the fixed deposit account.

What is the minimum overdraft amount against FD at SBI?

The minimum eligible amount for SBI's overdraft against FD is Rs.25,000.

As a minor, can I get a loan against my fixed deposit?

Unfortunately, no. You must be 18 years old and hold a valid fixed deposit account to access this loan.

Can I use my foreign currency savings for a loan?

Absolutely! Banks like HDFC and SBI offer loans against FCNR (Foreign Currency Non-Resident) deposits. Additionally, loans against NRE (Non-Resident External) and NRO (Non-Resident Ordinary) deposits are also available.

Is a loan against FD secured or unsecured?

The loan against FD is considered secure because the FD here acts as collateral, and the loan amount is a percentage of the FD’s value.


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