Federal Bank Loan Against FD: Features and How to Apply

Federal Bank Loan Against FD: Features and How to Apply

A Federal Bank loan against Fixed Deposit lets you borrow money using your FD as collateral without breaking the deposit. You get up to 90% of your FD value as a loan at an interest rate typically 1% to 2% above your FD rate, keeping your deposit intact and earning interest.

Key Features of Loan Against FD

• Loan amount: Up to 90% of the FD value
• Interest rate: FD rate plus 1% to 2% per annum
• Tenure: Up to the remaining tenure of the FD
• Processing fee: Nil or minimal, depending on the loan variant
• No income proof required for applying against your own FD
• Overdraft facility: Available against FD for flexible withdrawals

Benefits Over Breaking Your FD

Premature FD withdrawal attracts a penalty and you lose the higher interest rate. A loan against FD avoids both: your FD continues to earn interest at the original rate, while you get the funds you need at a low borrowing cost.

How to Apply for Loan Against FD via FedMobile

1. Open the FedMobile app and log in.
2. Go to Loans or Apply for Loan.
3. Select Loan Against Fixed Deposit.
4. Choose the FD you want to use as collateral.
5. Enter the loan amount (up to 90% of FD value).
6. Submit the application and complete any OTP verification.
7. The loan amount is credited to your linked savings account, often within the same day.

Overdraft Against FD

Instead of a term loan, you can opt for an overdraft against FD. This gives you a credit limit (up to 90% of FD value) in a separate OD account. Interest is charged only on the amount you use and for the number of days you use it, making it more cost-effective if you need funds intermittently.

FAQ

Does a Federal Bank loan against FD affect my credit score?

A loan against FD is typically reported to credit bureaus as a secured loan. Repaying it on time can actually improve your credit score. Defaulting, however, will negatively impact your CIBIL score.

Can I take a loan against an NRE or NRO Fixed Deposit with Federal Bank?

Yes, Federal Bank offers loans against NRO Fixed Deposits. Loans against NRE FDs are subject to FEMA guidelines and may have specific conditions; check with your branch or call 1800-425-1199 for current rules.

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

If the loan is not repaid by the due date, Federal Bank has the right to liquidate your FD to recover the outstanding loan amount. The remaining amount, if any, is credited back to your account.

Key Takeaways

• Federal Bank loan against FD offers up to 90% of FD value without breaking the deposit.
• Interest rate is 1% to 2% above the FD rate, making it a low-cost borrowing option.
• Apply via the FedMobile app for quick same-day processing.
• Overdraft against FD is a flexible option where interest is charged only on usage.
• Your FD continues to earn interest throughout the loan period.