Bank of Maharashtra Loan Against FD Guide

Bank of Maharashtra Loan Against Fixed Deposit

Bank of Maharashtra offers a loan or overdraft facility against your fixed deposit (FD), letting you borrow up to 90% of the FD value without breaking the deposit. This is one of the cheapest and fastest ways to get funds in an emergency.

What Is a Loan Against FD?

A loan against FD is a secured credit facility where your fixed deposit acts as collateral. You continue to earn interest on the FD while repaying the loan at a slightly higher rate, typically 1% to 2% above the FD interest rate. The FD is not premature-liquidated, so you do not lose the full interest.

Loan Against FD: Key Features at Bank of Maharashtra

• Maximum loan amount: Up to 90% of the FD value
• Interest rate: Generally 1% to 2% above the applicable FD interest rate
• Loan tenure: Cannot exceed the remaining tenure of the FD
• No prepayment penalty: You can repay anytime without extra charges
• No income proof required: The FD itself serves as security

How to Apply for a Loan Against FD at Bank of Maharashtra

1. Visit your Bank of Maharashtra home branch where the FD is held.
2. Submit a written application for a loan or overdraft against FD.
3. The branch verifies the FD details and checks that it is not already pledged.
4. Sign the loan agreement and lien marking form.
5. The loan amount is credited to your savings account or a loan account is opened, usually within the same day.

Loan Against FD vs Premature FD Withdrawal

• Loan against FD: FD continues to earn interest; you pay interest only on the borrowed amount; no penalty on the FD.
• Premature withdrawal: FD is closed; you lose a portion of the interest earned; funds are available immediately in full.

For most situations, a loan against FD is more cost-effective than premature withdrawal if you can repay the loan amount.

FAQ

Can I get a loan against a joint FD at Bank of Maharashtra?

Yes. A loan against a joint FD is possible, but typically all FD holders need to sign the loan application and lien marking form. The loan proceeds are credited to the joint account or the primary holder’s account as per bank policy.

Does the loan against FD affect my credit score?

Yes. Like any loan, it is reported to credit bureaus. Timely repayment will have a neutral to positive impact, while defaults can hurt your credit score. However, since the FD secures the loan, the risk of default is typically low.

Can I take a loan against a tax-saving FD at Bank of Maharashtra?

No. Tax-saving FDs (5-year lock-in under Section 80C) cannot be pledged or used for loans, as they have a mandatory lock-in period and premature withdrawal is also not permitted.

Key Takeaways

• Borrow up to 90% of your FD value without breaking the deposit.
• Interest is charged at 1% to 2% above the FD rate, making it low cost.
• The FD continues to earn interest during the loan tenure.
• Apply at your home branch; the loan is usually sanctioned on the same day.
• Tax-saving FDs are not eligible for loans against FD.