Loan Against FD — Borrow Without Breaking Your Deposit
A loan against FD lets you borrow up to 90% of your FD value at 1-2% above the FD interest rate, keeping your deposit intact and earning interest.
How It Works
Your FD acts as collateral. You can borrow up to 90% of FD value. Interest rate: FD rate + 1-2%. Your FD continues to earn interest. Loan tenure cannot exceed FD tenure.
Why Not Just Break the FD?
Breaking FD: 0.5-1% penalty on interest rate, lose higher rate benefit. Loan against FD: Your FD earns full interest, effective borrowing cost is only the margin (1-2%). Net cost is much lower.
When to Use
Short-term cash needs (1-6 months). Emergency expenses. Bridge financing while waiting for other funds. Don't want to disturb long-term FD earning higher rates.