Canara Bank Loan Against FD: How It Works

Canara Bank Loan Against FD: How It Works

Canara Bank offers loans against fixed deposits at interest rates as low as 1% above the FD rate, making it one of the cheapest credit options available. You can borrow up to 90% of your FD value without breaking the deposit. Here is how to apply and what to expect in 2026.

Key Features of Canara Bank Loan Against FD

• Loan Amount: Up to 90% of the FD principal value.
• Interest Rate: FD rate plus 1% (significantly lower than personal loan rates).
• Tenure: Linked to the remaining tenure of the FD.
• Processing Fee: Nil or minimal.
• Prepayment Charges: None.

For example, if your FD earns 7% per annum, the loan interest rate would be 8% per annum, far cheaper than a personal loan at 12-18%.

How to Apply for Loan Against FD at Canara Bank

Online via Canara ai1 App

1. Open the Canara ai1 app and log in.
2. Navigate to Loans and select Loan Against FD.
3. Select the FD you want to pledge as collateral.
4. Enter the loan amount (up to 90% of FD value).
5. Review the loan terms and confirm.
6. The loan amount is credited to your linked savings account instantly.

Through Branch

1. Visit your home Canara Bank branch with your FD receipt.
2. Fill out the loan application form and pledge the FD as security.
3. Submit the form and the bank processes it the same day.

When Is a Loan Against FD Better Than Breaking the FD?

Breaking an FD before maturity results in a penalty (typically 1% reduction in applicable rate) and you lose future interest. Taking a loan keeps the FD intact, continuing to earn interest, while you access the liquidity you need. If you can repay the loan within a short period, this is almost always the better option.

Key Takeaways

• Canara Bank offers loans up to 90% of FD value at FD rate plus 1%.
• The loan can be applied online via Canara ai1 app without a branch visit.
• No processing fee and no prepayment penalty.
• Keeping the FD alive while taking a loan is cheaper than breaking it prematurely.

Frequently Asked Questions

What is the maximum loan I can get against a Canara Bank FD?

Canara Bank offers up to 90% of the FD principal as a loan. For a Rs 1,00,000 FD, you can borrow up to Rs 90,000.

What is the interest rate on Canara Bank loan against FD?

The rate is your FD interest rate plus 1%. If your FD earns 7%, the loan will be charged at 8% per annum.

Can I get a loan against a Canara Bank FD online?

Yes. The Canara ai1 app allows you to apply for and receive the loan against FD entirely online, with the amount credited to your savings account immediately.

What happens to my FD if I do not repay the loan?

If the loan is not repaid by maturity, Canara Bank will adjust the outstanding loan amount including interest from the FD proceeds at maturity.