Central Bank of India Loan Against FD: Rate and Process

Central Bank of India Loan Against FD: Rate and Process

Central Bank of India offers loans against fixed deposits at interest rates typically 1% to 2% above the FD rate, allowing you to access up to 90% of the deposit value without closing the FD. This keeps your investment intact and earning interest while you meet your immediate cash need.

Key Features

• Loan amount: Up to 90% of the FD principal
• Interest rate: FD rate plus 1% to 2% per annum
• Repayment tenure: Up to the remaining FD tenure
• Processing fee: Nil or minimal (confirm with branch)
• Collateral: The FD itself acts as the security

How a Loan Against FD Is More Cost-Effective Than Breaking It

When you close an FD prematurely, Central Bank of India applies a penalty of typically 0.5% to 1% reduction on the applicable interest rate. In contrast, a loan against the FD allows you to continue earning the full contracted FD rate. If your FD earns 7% and the loan costs 8.5%, your effective borrowing cost is just 1.5% per annum, far less than a personal loan rate of 10% to 15%.

Eligibility

• Individual Central Bank of India account holders with a valid term deposit
• Joint FDs (all joint holders must sign the loan application)
• NRI FDs may be eligible under separate terms; consult the NRI services desk

How to Apply

1. Visit the Central Bank of India branch where your FD is held.
2. Request an Overdraft or Loan Against FD application form.
3. Fill in the form and attach your FD receipt, identity proof, and address proof.
4. Submit to the branch officer. The FD is marked as lien against the loan.
5. The approved amount is credited to your linked savings or current account, usually on the same day.

Overdraft vs. Demand Loan

• Overdraft: A revolving credit limit. Interest applies only on the amount drawn. Ideal for short-term or uncertain cash needs.
• Demand Loan: A one-time lump sum. Interest applies on the full outstanding balance. Suitable when you need the full amount upfront.

Key Takeaways

• Borrow up to 90% of your Central Bank of India FD without breaking the deposit.
• Effective borrowing cost is typically 1.5% to 2% per annum above the FD rate.
• FD continues to earn full interest during the loan tenure.
• The overdraft option is more cost-effective for irregular or short-term funding needs.

Frequently Asked Questions

What is the interest rate for Central Bank of India loan against FD?

Central Bank of India charges an interest rate of 1% to 2% above the FD’s contracted rate for a loan or overdraft against the deposit. The exact rate is confirmed at the branch at the time of application.

Can I apply for a loan against FD online at Central Bank of India?

The loan against FD process at Central Bank of India currently requires a branch visit for documentation and lien marking. Enquiries can be initiated via Cent Mobile, but final processing is completed at the branch.

Will my FD earn interest if I take a loan against it at Central Bank of India?

Yes. Taking a loan against an FD does not affect the FD’s contracted interest rate. The deposit continues to earn interest in full throughout the loan tenure, which is the primary financial advantage of this product.