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A Complete Guide to Get a Loan Against an FD

A Complete Guide to Get a Loan Against an FD

A Complete Guide to Get a Loan Against an FD

A Fixed Deposit (FD) has many benefits, but one of the best benefits is that you can leverage your fixed deposit and apply for a loan. Taking a loan against FD is easy, and you won’t need many documents. An added benefit is that the interest rates on loans against FD are lower than that of a regular loan, and there is no pre-payment penalty.

In case of any financial emergencies, a loan comes in handy to secure finances to deal with the situation. Here is where a loan helps you to deal with your situation in the most efficient way possible. You can always secure your finances by booking an FD with Shriram and get high-interest rates with the additional interest of 0.25%* p.a. on all renewals after your deposit has matured.

Getting a loan against a fixed deposit is simple and can be done online with access to a net banking account. It is called an overdraft facility and can be quickly started because only a few documents are required as the investor/you already hold an account with the bank or NBFC (Non-Banking Financial Company). Let’s take a look at everything you need to know to take a personal loan against a fixed deposit.

What is a Fixed Deposit?

fixed deposit is a savings scheme offered by banks or NBFCs. It can help you grow your savings over a period and give you assured returns. To start an FD, you must first invest a lump sum of money, select a tenure for this deposit, and upon maturity, you will get both the principal amount and the interest in your registered bank account. Depending on your financial requirements, you can decide if you want the interest paid in instalments or upon the FD’s maturity.

You can open a Shriram Fixed Deposit with an amount starting from Rs. 5000. With a Shriram Fixed Deposit, you can rest easy knowing that there will be no changes to an existing deposit in the case of market fluctuations. You will be paid the entire principal amount you invested plus the interest amount upon maturity of your deposit. The revised rates will only be applicable if you are starting a new deposit or are renewing an FD that matured recently.

What is the Eligibility of getting a Loan against an FD?

While getting a loan against an FD seems easy, you must remember that there are specific criteria you need to meet to get a loan against an FD. Listed below are the conditions you need to fulfil to be eligible for such a loan:

  • You need to have a fixed deposit account to be eligible for a loan against FD.
  • The fixed deposit amount should be more significant than the loan amount.
  • A fixed deposit in the name of a minor does not qualify for this scheme.
  • A person with a five-year tax-saving FD cannot apply for a personal loan against an FD.
  • The loan’s payback term cannot be greater than the tenure of the fixed deposit.

Procedure to get a Personal Loan against FD

There is no need to prematurely break FDs as you can always use them to get loans. You can obtain a loan against an FD online or offline. Many banks/NBFCs allow their account holders to avail of the loan by logging in to their internet banking accounts. If the financial institution of your choice does not have online facilities, you can always visit the nearest branch. To initiate the process, you must submit an application form, the required documents, and the FD receipt.

Features and Benefits of a Personal Loan against FD

  • No credit score checks: Generally, when you apply for a loan, the bank/NBFC will check your credit score. However, in the case of a personal loan against FD, your eligibility is independent of the credit score; hence, it majorly helps individuals with a lower credit score.
  • Lower interest rates: An FD acts as a security for a loan, and the interest charged on these loans is less. The interest rates on loans against an FD are usually lower than on personal loans. Hence, Equated Monthly Instalments (EMIs) on loans are lower.
  • Minimal documentation: Since the bank or NBFC from which you are taking the loan already has your details, issuing the loan is easy. Apart from the application form for the fixed deposit, you will also need to submit the fixed deposit receipts and identity proof.
  • No pre-payment penalty: Pre-payment on a loan is the ability of a customer to pay the entire amount loaned before its official due date; however, you might have to pay some charges. In the case of a loan against FD, you won’t have any pre-payment penalty. You can also continue earning interest on your FD while taking a loan against it.

What is an Overdraft Facility?

Banks and NBFCs offer a personal loan against an FD, called an overdraft facility. An overdraft facility is a financial instrument that allows you to withdraw money from your bank account (savings or current), even if you do not have any balance. Like any credit facility, an interest rate is charged on the overdraft facility when you avail of it.

Interest is only charged on the overdraft amount taken, not the absolute limit. Let us understand more about this with an example: Suppose Mrs Sharma owns an FD of Rs. 1 lakh, and her overdraft limit is 90%. Suppose she takes a loan of Rs. 50,000, which is half the FD amount. This way, the interest will be charged only on Rs. 50,000 and not 90% of the deposit amount.

Steps to Open an FD

Shriram Fixed Deposit is rated “IND AA+/Stable” by India Ratings and Research, indicating high safety. Here are the steps to quickly start a new fixed deposit:

  • Step 1: Visit the bank branch or NBFC with which you have an account and ask for the FD opening form.
  • Step 2: Fill in all the details and submit documents like identity proof, address proof and bank account details.
  • Step 3: After verifying the information in your documents, the bank/NBFC will start opening your new FD account.
  • Step 4: Your account will be started, and you can now earn interest and use it for additional benefits like taking a loan against FD.


A personal loan against a fixed deposit is easy to get, provided you already have a fixed deposit. You do not need a credit score, and banks/NBFCs won’t need to check it if you have a fixed deposit. If you have not invested in an FD yet, it’s never too late, and you can start one now.

Start a Shriram FD to get one of the best interest rates available. You can use the Shriram FD calculator to check the amount of interest you can avail of upon the maturity of your deposit. Senior citizens can also benefit from interest rates up to 9.20%* p.a., including an additional 0.50%* p.a. for Senior Citizens and 0.10%* p.a. for women depositors. You can easily use the FD to help whatever financial need pops up in your life.


1. How much loan can I take on my FD?

You can only take up to 90% of your fixed deposit as a loan. This means if you have an FD of Rs. 1 lakh, you can only take a loan up to Rs. 90,000.

2. What is the tenure within which the loan taken against FD should be repaid?

A loan against an FD must be repaid before the fixed deposit maturity.

3. In which type of deposit loan against FD is not allowed?

You cannot take a loan against FD if the deposit is in the name of a child or if you have a five-year tax-saving deposit.

Key Highlights:

  • A personal loan against FD can be taken by anyone who already has a functional fixed deposit.
  • You do not need other additional documents to take a loan against an FD.
  • The interest rates on loan against FD is lower than the interest rate on regular loans.
  • There is no pre-payment penalty for a loan against FD.
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To mark this momentous occasion, we have launched Shriram Jubilee Deposit - a 50-month investment scheme.
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