Want to claim a loan against FD? All you need to know

Customers frequently require bank loans for a variety of reasons. A Fixed Deposit is one investing option that can assist people in this situation. One of the easiest methods is to take out a loan or an overdraft (OD) against an FD, as the FD is used as collateral under the OD facility, while the invested money stays intact.

Many people are unable to obtain a loan because of low CIBIL ratings or income. They are not required to fulfil any of these standards in an FD overdraft case. To qualify for the loan, the individual only has to have an FD with a bank.

There is no documentation needed in obtaining an overdraft facility. The FD account holder will not be required to provide any more documentation because the bank currently has all of your KYC information. Within 24 hours, the borrower will get the monies in their account.

There are no processing costs for FD account holders requesting a loan on their account. They will also not have to pay any additional expenses, such as foreclosure or prepayment penalties.

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Banks often allow overdrafts of up to 90 percent of the current FD's value. The interest rate on the overdraft facility is 1-2 percentage points higher than the rate on the underlying FD. The benefit of this facility is that the borrower must pay interest on the amount of the overdraft that they utilise on a daily basis.

As a result, a recurrent overdraft on FD can be used to meet a short-term liquidity requirement. Another advantage of this facility is that the borrower is not required to make monthly EMI payments. They can deposit the outstanding sum whenever it is convenient for them.

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• Fixed Deposit
• loan
• EMI
• banks
• KYC