Loan Against Term Deposit

 

What is a Fixed Deposit?

A fixed deposit is a financial product offered by banks to help you earn higher rate of interest on your savings than a regular savings account. It is a kind of savings account that pay you a fixed rate of interest on your savings for investing them for a stipulated duration decided by bank. As the name suggest, these are deposits for fixed tenures. You cannot withdraw them prior to maturity. But with advanced notification to bank and paying a penalty fee, you can withdraw your fixed deposits. You can invest in fixed deposits for varying tenures at different interest rates, and earn added benefits on your savings.

 

Loan Against Fixed Deposit

MDCCB offer loan against fixed deposit accounts. This helps you fulfill your financial requirements by providing funds up 80% of the value of your fixed deposit. Loan against fixed deposit is granted as demand loans or overdraft against deposits.

 

Rate of Interest

1% above the relative fixed deposit rate

 

Tenure of Loan

Loans against fixed deposits can be taken for any tenure as long as it does not exceeds the tenure of your fixed deposits.

 

Benefits of taking a loan against FD

  • It helps in liquidity management. Loan taken against your fixed deposit account can help you get short term money for any kind of financial requirements without breaking your FDs. It also saves you from selling your assets at discounted value to fulfill your monetary needs.
  • The most important advantage of taking a loan against fixed deposit is that you can get a loan at comparative and lower rates of interest than other personal loans as they are unsecured loans. Loans against FDs are secured loans with the underlying deposit in your FD account.
  • Loans are available to self and third party individuals including corporate organizations.

 

How to apply for a loan against FD?

First, you need to fill a loan application form by putting all the required information. Along with the loan application form, you need to attach your fixed deposit receipt received from the bank. Upon receiving these documents, the bank will grant a loan against your fixed deposit.

 

How to repay your loan against FD?

Bank may offer you a flexible repayment plan. You may be allowed to repay your loan in instalments or lump sum. Also, banks may allow preferred customers to borrow up to a particular limit and repay when cash is available.
All scheduled and non-scheduled banks – public, private, foreign, cooperative, regional rural and local area banks – will observe public holiday on second and fourth Saturdays from September 01, 2015; and will observe full working days on Saturdays other than second and fourth Saturdays (referred to as working Saturdays in the Press Release). Consequent to this, the Reserve Bank of India has announced the following changes in its functioning with effect from September 1, 2015.



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