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Can you take a loan against a fixed deposit?

By Finserv MARKETS - Aug 26,2019
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Can you take a loan against a fixed deposit?

After getting his first promotion at work, Dhruv thought he was ready to begin investing some part of his increased salary in a safe financial instrument that would fetch him good returns. While there were so many new-age options like mutual funds that his friends recommended, his heart was set on the tried and tested fixed deposits, an investment that is immune to the volatility of the stock market. But he wasn’t sure if he could draw immediate financial support from his fixed deposit in times of emergency.

A lot of us might have had the same inquiry about fixed deposit while deciding to invest in them. The answer is, yes. You can easily take a loan against your fixed deposit to finance your impending requirements. And, if you are looking to open a fixed deposit, you can do that online through Finserv MARKETS without the hassle of bank queues and extensive documentation.

Every investment carries an inherent risk, involving market fluctuations, economic conditions or any other unpredictability. These risks become greater when you invest in high-risk investment options like equities and stocks. However, fixed income instruments like fixed deposits sidestep market volatilities and offer guaranteed yield throughout the tenor.

All banking and non-banking lenders offer personal loans against fixed deposits. Through these personal loans, you can easily take care of your financial needs without having to worry about breaking a fixed deposit.

Loan against fixed deposit is a secured loan, where you can pledge your deposit as the collateral. Loan against fixed deposit is given in the form of an overdraft against your deposited amount. This is an alternative given to you instead of breaking the deposit prematurely. Most of the banks allow a loan in the range of 70-90% of the deposit amount. Some banks even offer more than this range. There is no standard on the amount of loan that can be sanctioned. It varies from bank to bank and also upon the amount deposited.

Interest rate charged on the loan given on a fixed deposit is usually slightly above the interest paid by the bank on the deposit.
Apart from these reasons, another aspect that makes fixed deposits appealing is that it reaches a wider population. With the minimum deposit required usually being Rs. 25,000, it can be easily opted by a lot of young, working professionals without having to wait to accumulate a larger corpus. In case of a smaller deposit, you can ladder your investments in order to earn better returns.
Most of the lenders like Bajaj Finance Fixed Deposit available on Finserv MARKETS do not levy any kind of processing fees. The maximum loan tenure offered for loan against fixed deposit is the term of the deposit itself. You can pay back the amount through easy installments like any other loan. Moreover, usually, there’s no penalty in case of foreclosure on the loan against fixed deposit.
According to the data provided by the apex bank, the Reserve Bank of India, fixed deposits outperformed both equities and debt funds last year. The numbers reveal that equities gave returns of around 2.7%, debt funds offered 5.5 -5.9% and fixed deposits yielded 6.25%.


Can you take a loan against a fixed deposit?


A report by CARE Ratings says bank deposit growth will benefit partly from the present crisis in non-banking financial companies where debt funds have been impacted and households are likely to move back to bank deposits.

A bank deposit is a resilient and efficient financial tool that gives you assured returns and is not subject to a plethora of market conditions. In recent months, the liquidity crunch in the market is apparent, offset by the IL&FS default. Such precariousness of the stock market also reinforces one’s faith in the stable and safe investments like bank deposits. If you haven’t already started an investment into fixed deposit, you can easily do that online, in a hassle-free way through Finserv MARKETS.

Available on Finserv MARKETS, Bajaj Finance Fixed Deposit offers attractive FD interest rates of up to 8.95%, giving you the opportunity to multiply your savings. Moreover, you can plan ahead of time by checking your final maturity amount using an FD Calculator.


Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!


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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522