Loan Against Fixed Deposit (FD): Rates, Process 2025
Loan Against Fixed Deposit (FD): How to Borrow Without Breaking Your FD
A loan against a fixed deposit (FD) is one of the smartest ways to meet an emergency without losing your investment. Instead of breaking your FD and losing the interest earned so far, you pledge it as collateral and get a loan at a lower interest rate. Your FD continues to earn interest while you use the borrowed funds.
Overview of Loan Against FD
Almost every bank in India offers loans against fixed deposits. The loan amount is typically 70% to 90% of the FD value. Since the FD itself acts as security, the lender faces minimal risk, which is why interest rates on these loans are among the lowest available. The RBI does not set a specific LTV cap for FD loans, but most banks follow conservative internal limits.
The interest rate on a loan against FD is usually 1% to 2% above the FD interest rate. So if your FD earns 7%, your loan interest rate would be around 8% to 9%. This is significantly cheaper than a personal loan.
Interest Rates
| Bank | Interest Rate on Loan Against FD | Max Loan-to-FD Ratio |
|---|---|---|
| State Bank of India (SBI) | FD rate + 1% | 90% of FD value |
| HDFC Bank | FD rate + 1% to 2% | 90% of FD value |
| ICICI Bank | FD rate + 2% | 90% of FD value |
| Bank of Baroda | FD rate + 1% | 95% of FD value |
| Axis Bank | FD rate + 1.5% to 2% | 85% of FD value |
These are indicative rates. Actual rates may vary based on the bank’s current policies, the FD tenure, and the loan amount.
Eligibility
- You must hold the FD with the same bank where you are applying for the loan
- Individual FD holders, joint account holders (with all co-holders’ consent), and HUFs are eligible
- The FD must be active and not matured or pre-closed
- FDs held by minors are generally not eligible
- No minimum income proof or credit score check is required
Documents Required
- FD receipt or certificate (original)
- Loan application form
- Aadhaar card and PAN card
- Address proof
- Passport-sized photographs
- In case of joint FD: signature and consent from all joint holders
Application Process
Branch Application
Visit the bank branch where your FD is held. Submit your FD receipt along with the application form and KYC documents. The bank will create a lien on your FD and disburse the loan amount to your savings account, usually within the same day.
Online Application
Major banks like SBI, HDFC, and ICICI allow you to apply for loans against FDs through net banking or their mobile apps. The process involves selecting the FD, entering the desired loan amount, and confirming the application. The loan is usually credited immediately in many cases.
Repayment and Closure
You can repay the loan before or at the maturity of the FD. If the loan is not repaid by FD maturity, the bank can adjust the outstanding loan amount from the FD proceeds. The remaining balance (FD maturity amount minus outstanding loan) is credited to your account.
Frequently Asked Questions
Can I take a loan against an FD held in another bank?
No. You can only take a loan against an FD from the same bank where the FD is held. The bank needs to place a lien on the FD as security.
What happens to the interest on my FD while the loan is outstanding?
Your FD continues to earn interest normally throughout the loan tenure. The interest is not impacted by the loan against it.
Is there a processing fee for loans against FD?
Most banks do not charge a processing fee for loans against their own FDs. Some banks may charge a nominal fee for very large loan amounts. Check with your bank for exact terms.
Can I take a loan against a tax-saving FD (5-year FD under Section 80C)?
No. Tax-saving FDs (under Section 80C) have a mandatory lock-in period of 5 years. You cannot pledge these FDs for a loan during the lock-in period.
