As we all know our life is full of uncertainties and here you may need money at any time. In such a situation, people get FD to meet their financial needs in the future. Which have been the basis of investment for Indians for decades, offering attractive interest rates and security, FDs provide peace of mind to risk-averse investors. But if we talk about recent times, most people are taking advantage of their FD for loans. Loans against fixed deposits have increased by 16.47% annually, reaching ₹ 113.9 crores in 2023, from ₹ 97.5 crores in 2022. Let's know its complete details

What are Fixed Deposit Loans?

Loans against fixed deposits are secured loans offered by banks and financial institutions. They allow depositors to access funds without breaking their fixed deposits.

Quick access to funds: Fixed deposit loans usually provide instant access to funds with minimal paperwork and hassle.

No processing fees: Most banks do not charge a processing fee for these loans, making them an affordable option.

Exceptions: Loans against 5-year tax-saving FDs are not available and minors cannot apply for FD loans.

Interest rates

Interest rates for loans against FDs are usually 0.75% to 2% higher than the FD interest rate. The best part is that these rates are fixed, which protects borrowers from market fluctuations.

Loan amount

The amount you can borrow varies from institution to institution.

Fast approval process

One of the most important benefits of FD loans is the quick approval process. Your FD acts as collateral, so there is less need for extensive credit checks, leading to faster processing times.

Eligibility Criteria

Eligibility for a fixed deposit loan extends to any individual who has an FD account with a bank or financial institution. This includes:

Non-resident Indian citizens
Family trusts
Hindu Undivided Families (HUFs)
Clubs, societies, associations, partnership firms and group companies