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How to Apply for a Loan Against Fixed Deposits

At present, beneficiaries can withdraw up to Rs 2 lakh from their NPS account

At present, beneficiaries can withdraw up to Rs 2 lakh from their NPS account

The application for loan against FD is a time-efficient way of getting a short-term loan that comes with minimal documentation and guaranteed approval.

Are you considering premature withdrawal of your fixed deposits to meet emergency fund requirements? But, breaking FDs before maturity results in loss of interest, attracts a penalty or even disrupts your investment plans.

How about considering an option that provides the emergency money within 24 hours without breaking your fixed deposit? An individual can apply for a loan against fixed deposits that will enable him/her to fund the financial requirements easily without having to hamper your investments.

The application for loan against FD is a time-efficient way of getting a short-term loan that comes with minimal documentation and guaranteed approval. This enables an individual to grow savings and ensure easy liquidity, and can also be used as emergency funds.

Among many benefits of taking a loan on your fixed deposits is that one can avail a loan up to 75 percent of the amount invested in case of cumulative fixed deposits. And in case of non-cumulative fixed deposits, one can get a loan of up to 60 percent of the invested amount.

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The approved amount is credited in the applicant’s account within just 24 hours and no extra charges are levied for foreclosure or part-prepayments making it very convenient to fulfil one’s financial needs.

It is easier to obtain and can be obtained by simply filling up an application form. This helps an individual avoid bearing the loss of interest rate on fixed deposits for premature withdrawal.

All fixed deposit holders, individual or joint accounts, are eligible to apply for loan. But, FDs in the name of minors do not qualify for this facility. Banks do not offer loans against FD benefits to the investors of 5-year tax-saving fixed deposits. Banks and NBFCs usually charge 0.5 percent to 2 per cent rate of interest above the applicable fixed deposit interest rates.

There is no processing fee or any other charges to avail loan against FDs. Loan against fixed deposit must be repaid before the maturity of the FD and under no circumstance can it exceed the tenure of the FD against which loan is taken.

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first published:February 01, 2021, 14:51 IST