Can NSC be used as collateral for a loan?

Yes, National Savings Certificates (NSC) can indeed be used as collateral for securing loans from various financial institutions. Being a government-backed investment, NSCs are viewed as reliable and low-risk assets by lenders, making them an attractive option for borrowing. This arrangement allows investors to access funds without having to liquidate their investments, thereby maintaining the benefits of their savings.

Key Points:

• Loan Amount: When using NSC as collateral, the loan amount you can secure is typically a percentage of the NSC's current value. Lenders usually allow borrowers to access around 80% to 90% of the NSC's face value. For instance, if you have NSCs worth ₹1,00,000, you could potentially secure a loan ranging from ₹80,000 to ₹90,000.
• Interest Rates: Loans against NSCs generally come with lower interest rates compared to unsecured loans. This is due to the reduced risk for lenders, as they have a secured asset backing the loan.
• Documentation: To secure a loan against your NSC, you will need to present the original NSC certificates along with standard identification documents, such as Aadhaar or PAN cards.
• Loan Tenure: The repayment tenure for loans against NSCs can vary by lender, but it is generally flexible, allowing borrowers to choose a repayment schedule that suits their financial situation.

For detailed information on the maturity amount and the interest earned, use an NSC calculator to make an informed decision.