What is Personal Loan Against FD? Know in Detail

• You can borrow up to 90% of your FD’s value.
• The interest rate is usually lower than regular personal loans.
• No need to break your FD prematurely.
• Quick processing and minimal paperwork, especially with FD Online .
• Ideal for short-term or emergency needs like medical bills or travel expenses.

Fixed Deposits (FDs) are one of the most popular savings instruments in India. But did you know that your FD can also help you during a financial crunch? That’s where a personal loan against FD comes into play.In simple terms, it lets you borrow money using your FD as security. It’s a smart way to handle emergencies without breaking your investment. Let’s understand how it works and why it can be a beneficial option.

A personal loan against FD is a secured loan offered by banks and NBFCs. Your FD acts as collateral. This reduces the risk for the lender, so you get the loan easily and at a lower interest rate.

How Does It Work?

Let’s say you have an FD of ₹5 lakh. If your bank allows 90% loan against it, you can borrow up to ₹4.5 lakh. Your FD remains untouched and continues to earn interest. Once you repay the loan, your FD continues as it is.

1. Lower Interest Rates

Since this is a secured loan, the interest rate is just 1–2% higher than the FD interest rate. This makes it much cheaper than regular personal loans, which can charge up to 15–20%.

Example:

If your FD gives 6.5%, the personal loan against FD might have an interest rate of around 8%—far lower than an unsecured loan.

2. Quick Disbursal

Banks process these loans faster because they already have your FD details. Many banks allow you to apply using FD Online , making it even faster.

3. No Need to Break Your FD

If you break your FD before maturity, you lose out on interest. But with this loan, your FD stays intact and continues to grow.

4. Flexible Repayment

Most lenders offer flexible repayment options, from a few months to the full FD tenure. You can choose what suits your financial plan.

5. Continued FD Benefits

Even with a loan against it, your FD earns the original interest. This means you don’t lose out on your savings benefits.

Applying for a personal loan against FD is simple and quick, especially if you already have an FD with the lender. Most banks and NBFCs now allow you to apply online through their FD Online platforms or by visiting a branch.

Step-by-Step Process

• Login to your bank account – Go to the bank’s portal or app.
• Choose the FD Online section – Locate the loan against FD option.
• Enter the loan amount – Based on your FD value.
• Select tenure – Decide how long you want to repay.
• Submit application – The loan is usually disbursed instantly.

Documents Required

• FD account details
• Identity proof (Aadhaar, PAN)
• Address proof

Some banks may not ask for fresh documents if you are an existing customer. Also Read: 7 Common Personal Loan Myths

A personal loan against FD is ideal when you need urgent funds but don’t want to lose out on the interest your fixed deposit is earning. It works best for short-term cash flow gaps, emergency expenses, or planned purchases.

• Medical Emergencies: Need funds for sudden hospital expenses? This is a quick fix.
• Education Fees: Ideal for short-term educational needs or coaching classes.
• Travel: Planning a family trip? Use your FD smartly.
• Business Needs: Need working capital? This loan helps without touching your savings.

Example:

Priya, a working professional in Pune, had an FD of ₹3 lakh. She needed ₹2 lakh urgently for her father's surgery. Instead of breaking her FD, she applied for a personal loan against FD through her bank’s FD Online portal. The loan was approved in minutes, and her FD remained untouched.

Anyone with a fixed deposit—whether an individual, senior citizen, or business entity—can apply for a personal loan against FD . It’s a convenient option for both existing and new FD holders looking for quick access to funds.

• Individuals with a valid Fixed Deposit
• Joint FD holders (with consent from both)
• Companies and HUFs with corporate FDs

Banks usually don’t offer this loan if the FD is in the name of a minor or is held under tax-saving lock-in. Important Points to Remember

• You cannot avail of this loan against a tax-saving 5-year FD.
• If you fail to repay, the bank can liquidate your FD.
• Loan amount and tenure vary from bank to bank.
• Some banks charge a small processing fee.

Always check the terms before applying.

Using FD Online , you can apply for the loan anytime, anywhere. Most leading banks and NBFCs offer this option through their websites and mobile apps. This removes the need to visit a branch and speeds up the process.Some benefits of FD Online applications:

• Instant eligibility check
• Quick disbursal
• Paperless processing
• Transparent terms and conditions

A personal loan against FD is a practical solution when you need quick funds but want to keep your savings intact. It comes with lower interest, flexible repayment, and zero hassle—especially when done through FD Online .If you have an FD and find yourself in a temporary financial crunch, consider this option first. It’s safe, fast, and financially smart.With Aditya Birla Capital , you can easily avail a personal loan against your fixed deposit with minimal paperwork, quick processing, and continued FD returns. Learn more about their offerings here .