An overdraft facility is a credit arrangement between a bank and an account holder that allows them to spend or withdraw more money than they have in their account up to the allowed amount. The bank charges a predetermined rate of interest on the overdraft amount used by the borrower. Interest is computed on a daily basis and billed/debited to you monthly. If you fail to pay the overdraft amount on time, the interest rate increases.

What is Overdraft Against FD?

A fixed deposit is one of the most prominent kinds of investments since it can be used to meet both short and long-term financial requirements. You can also withdraw your FD funds prematurely in the form of an overdraft against FD in the event of a financial emergency. However, in order to do so, you are required to pay a penalty. FD overdrafts are some of the easiest methods to borrow money from the bank. Your fixed deposit investment is utilised as security in this facility, and the money is subsequently given to you as an overdraft.


You may save yourself from paying a penalty by using the overdraft against FD facility. In this facility, you can acquire a loan against your fixed deposit. You may cover your unexpected costs while still earning money on your FD by taking out an OD against it.


Banks often allow up to 90% overdrafts against FD value. Another intriguing feature of this credit facility is that the applicable overdraft interest rates are just 1-2% higher than the underlying FD interest rate. Furthermore, you will be charged interest only on the value used from the OD, not the entire amount.


With the overdraft against FD option as a liquidity solution, you may deposit the entire due amount whenever you choose. An overdraft's tenor is determined by the loan's maturity time. When the FD is renewed, the bank allows the overdraft facility to be renewed as well. You may easily obtain this service online using your banking account, or you can apply in person by visiting your bank’s branch.

Eligibility Criteria to Get an Overdraft Against FD

The most essential requirement for obtaining an overdraft against a fixed deposit is that you must have a fixed deposit account with the bank or financial institution from which you wish to obtain the facility.


Apart from this, to obtain OD against FD, you must be one of the following:

  • An Indian citizen or NRI above 18 years

  • Members of HUF (Hindu Undivided Family)

  • Partnership Firms

  • Family Trusts

  • Corporations

  • An Association

  • Educational Institutions

  • Societies

  • Clubs


Here's another list that will assist you in understanding the eligibility criteria.

  • Holders of individual and combined fixed deposit accounts can opt for this facility.

  • FD in the name of a minor can’t be utilised for an overdraft facility.

  • FD account holders having a 5-year tax saver are not eligible for this facility.

Benefits of an Overdraft against FD

Lower Rate of Interest

Overdraft against fixed deposit interest rate is cheaper when compared to other forms of loans. The interest rate on this facility is usually 1-2% higher than the interest rate on fixed deposits. For a Read More better understanding, you may use the OD against FD calculator available on the financial institution’s website to get an accurate result. Read Less

Flexible Payback Duration

The tenor of your OD against FD is the same as the fixed deposit's term. For example, if your fixed deposit is for five years, your loan payback period will be five years as well. However, you should k Read Moreeep in mind that the loan payback duration might be shorter than, but not greater than the tenor of the FD. Read Less

Quick and Easy Application Process

The application procedure of applying for an overdraft against FD facility is simple and hassle-free. If you already have an FD account, you don't have to go through the time-consuming documentation pr Read Moreocess. As a result, your time and effort will be saved. All you have to do is to fill out the application form and provide the asked details for an overdraft against FD. You can do so through your net banking account or by visiting the institution’s branch. Read Less

No Need to Pay Penalty

In the event of financial emergencies, you prematurely break your FD and end up paying a penalty. By using an OD against FD credit facility, you will be saved from this and can also fulfill all your fi Read Morenancial commitments. Read Less

Zero Processing Fee

To procure this service, you are not required to pay any processing fee. As a result, your overall loan cost will be reduced.

How to Apply for an OD Against FD?

You can apply for overdraft on FD through online or offline mediums.

1. Online Medium

Here are the steps to follow.

  • Log in to your net banking account using your credentials.

  • On the main tab, go to the ‘ Fixed Deposit’ menu.

  • Choose the ‘Overdraft facility against FD’ option.

  • Fill in the form and provide the details like the required amount, tenure, etc and so on.

  • Next, submit the form.

  • Following that, your bank will process your request and approve it within a few days.

  • Once approved, the amount will be transferred to your account.

2. Offline Medium

Here are the steps to follow.

  • Visit the financial institution’s branch.

  • Ask for the form from officials.

  • Fill in the form carefully and provide details like the required amount, payback tenure, and so on.

  • Submit it along with the supporting documents.

  • After that, your request will be processed.

  • It may take up to a few days to receive the approval.

  • After approval, the funds will be transferred to your account.

How to Close Overdraft Against FD?

You can close the overdraft against FD once you have repaid the whole amount by visiting the financial institution’s branch. You may also do so through your net banking account.


The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort. 

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products. 

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FAQs on OD against FD

What is an overdraft facility on FD?

You can take a loan against your fixed deposit investment, which is also known as an overdraft or OD facility. The loan amount will be lower than your deposit and the interest rate will be higher than that of the FD itself. So, you can borrow up to  90% of the deposit amount in certain cases and the interest rate will be higher by 1% to 2% than the underlying FD interest rate.

How much money can I borrow against a fixed deposit?

Banks can typically lend between 70% and 90% of the fixed deposit amount.

How much processing fee do I have to pay for an OD against FD?

You are not required to pay any processing fee as this credit facility is exempted from processing charges.

Who is eligible for an OD against FD?

To obtain an overdraft on FD, you must be one of the following:

  • An Indian citizen or NRI above 18 years

  • Members of HUF (Hindu Undivided Family)

  • Partnership Firms

  • Family Trusts

  • Corporations

  • An Association

  • Educational Institutions

  • Societies

  • Clubs

How much interest rate do I need to pay for overdraft against FD?

Overdraft against fixed deposit interest rate is cheaper when compared to other forms of loans. The interest rate on this facility is usually 1%-2% higher than the interest rate on fixed deposits.

If I want to pre-close my FD, what will happen to my OD?

Before you consider pre-closing your current FD, please be aware that the bank or NBFC will impose a penalty. This could be up to 1% and will be deducted from the effective rate of interest. Your bank or NBFC could liquidate a part of your fixed deposit investment amount should you need the funds for urgent expenses since it is a better option than taking a loan with bigger interest rates. However, your bank will retain a part of your deposit amount to close your OD, if you haven’t already done so.

Which bank is best for OD against FD?

You could approach various banks to get an OD on FDs such as HDFC Bank, Axis Bank, State Bank of India, etc. However, while choosing your preferred bank, keep in mind the interest rate of an OD against FD interest rates and the maximum percentage of a deposit amount that can be disbursed as a loan to you.

Is it good to take an OD loan?

If you need a short-term loan for an immediate need that you can pay off quickly, an OD on FDs can be good for you.

Is OD against FD a good option?

ODs against FDs are some of the easiest borrowing methods out there. Your FD investment acts as a collateral while you also get to use a portion of it as a loan amount. So, instead of cutting your FD short for immediate expenses, you could always take an OD against it instead.

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