A Complete Guide to Get a Loan Against an FD

16 Oct 2023

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It's simple to borrow money against a fixed deposit to get quick access to cash. In addition, you have the option of borrowing a loan against an FD as opposed to losing all or a portion of your investment. The Bank of Baroda loan against the FD program allows you to borrow up to 90% of the overdraft on your loan. The only amount that must be repaid is the original loan amount plus interest.

People typically seek funding options, such as loans and other lending opportunities, during a financial emergency or cash crunch. Taking loans against fixed deposits is one of those essential sources (FD). This is a quick way to approach financial institutions about short-term loans. You can easily choose to get a loan against FD from the bank where you already have fixed deposits instead of prematurely terminating them.

You won't need many documents if you take out a loan against your FD. Additionally, there is no pre-payment penalty and interest rates on loans secured by FDs are lower than those on traditional loans. Let's explore everything you should know before taking out a loan against a fixed deposit.

What is a Loan Against Fixed Deposit (FD)?

Fixed deposits are financial products that let you make long-term investments with the assurance of a return. They offer more appealing returns than conventional savings accounts. The loan against FD is disbursed to the borrower all at once, just like any other loan, and is paid back by the borrower in equal monthly instalments.

The amount of the FD deposit determines the loan's amount. Depending on the deposit amount, this could reach 90%. A loan against a customer's fixed deposit, which is a type of secured loan, may be obtained using the deposit as security.

A small amount is required to open a BOB Fixed Deposit . With the Bank of Baroda, you can relax knowing that despite changes in the market, an existing deposit won't be altered. The benefits of a loan against FD BOB (Bank of Baroda) are that it includes flexibility, security, and guaranteed savings returns.

Who Can Apply for a Loan Against FD

Holding a fixed deposit with the bank or financial institution you're seeking a loan from is the basic requirement to qualify for a loan against FD. You should also, however, fit one of the following descriptions:

  • Associations, clubs, and societies
  • Group companies, partnership firms, and sole proprietorships
  • Family trusts
  • Residents who are Indian
  • To ascertain if you are eligible to apply for a loan against fixed deposits , see the following list:

  • Owners of 5-year tax-saving FD accounts are not eligible for this type of loan.
  • FD in a minor's name is ineligible.
  • Account holders for both individual and joint fixed deposits

Also Read: How To Open A Fixed Deposit Account

Features and Benefits of a Loan against FD

There are several benefits of a loan against your FD account. Consider the following list of features and benefits of a loan against FD.

  • No penalty for pre-payment- The ability to pay off a loan in full before the agreed-upon due date is known as prepayment; however, there may be fees involved. You won't pay a pre-payment penalty if you take out a loan against FD. Additionally, while taking out a loan against your FD, you can still earn interest on it.
  • Minimal Documentation- Issuing the loan is simple because NBFC or the bank from which you are requesting it already has your information. You must also submit your fixed deposit receipts and identification documentation in addition to the application for a loan against a fixed deposit.
  • Lower rate of interest- The interest rate on these loans is lower because an FD serves as the security for them. Personal loans typically have higher interest rates than loans against FD interest rates. This results in lower (EMIs) for loans.
  • No credit score checks- In most cases, NBFC or the bank will examine your credit history when you apply for a loan. A loan secured by an FD, on the other hand, does not depend on your credit score to determine your eligibility, so it primarily benefits people with lower credit scores.

How to Apply Online for a Loan Against Fixed Deposit

  • Access the website of the financial institution/Bank of your choice.
  • Find the section labelled "Fixed Deposit."
  • Then, choose "Overdraft/Loan Facility against FD."
  • Give pertinent information, such as the term and the required loan amount.
  • You'll be notified via SMS or email when your loan application has been submitted because it's an online process.

What is an Overdraft Facility?

Banks provide customers with an overdraft facility in the form of a loan against Fixed Deposit . Also known as OD against FD. The overdraft or OD limit, which is secured by a fixed deposit, is lower than the deposit amount, but the rate of interest is higher than the rate that is currently being charged on FD cards.

Additionally, it is important to keep in mind that interest is only charged on the amount of the overdraft, not the entire limit. Let's take an example of OD against FD. For instance, Ms A has an 85%OD limit and an Rs. 1.5 lakh FD. Only half of the deposit amount—75,000 rupees—is borrowed by her. As a result, interest will no longer be charged on deposits that exceed 85% of the amount of the deposit, but only on the first 50%.

Also Read : Complete Guide on Fixed Deposit (FD)


There is still time to start an FD if you haven't already invested in one. Getting a loan against an existing fixed deposit is simple if you have one.

Whatever your financial needs may be, you can easily use the FD to support yourself. Get the most competitive interest rates by starting a Bank of Baroda FD. The BOB FD calculator can be used to determine how much interest will be available when your deposit matures.

Frequently Asked Questions (FAQs)

1. How much loan can I get against FD?

Up to 90% of the amount of your FD may be borrowed. You can also look at the interest rate for loans secured by FDs.

2. What is a loan against FD interest rate?

The interest rate for the loan against FD will be determined by your bank or will be 1% to 2% higher than the current interest rates.

3. What is the tenor within which the loan taken against FD should be repaid?

An FD loan must be repaid before the fixed deposit matures.

4. Can senior citizens apply for a loan against FD?

Yes, senior citizens are eligible to apply for loans secured by FDs.

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    The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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