A personal loan against fixed deposit lets you borrow up to 90-95% of your FD value at just 1-2.5% above your FD’s own interest rate, typically 7-9% per annum, instead of paying 10.5-16% on a regular personal loan. Your FD keeps earning interest exactly as before, and most partner banks disburse the loan within 24 hours with no separate CIBIL check. 

What Is a Personal Loan Against Fixed Deposit?

A personal loan against fixed deposit (also called an FD loan or loan against FD) is a secured loan where your own fixed deposit is pledged as collateral instead of being withdrawn. The bank places a lien on the FD and lends you a percentage of its value, so the deposit continues earning interest until maturity while you use the borrowed funds for any personal need.

Unlike a regular personal loan, a loan against fixed deposit does not require income proof, a high CIBIL score, or a guarantor in most cases, because the FD itself secures the loan. This makes it one of the fastest and cheapest ways to raise short-term funds in India, whether the requirement is a medical emergency, a wedding expense, a business shortfall, or simple cash-flow management.

At Ruloans, a financial distribution company working with 275+ banks and NBFCs across 4,000+ Indian cities, borrowers can compare loan against FD offers from multiple partner lenders and get matched with the one offering the most suitable interest rate and tenure, all without breaking the fixed deposit.

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Also Read: 3 Benefits of Taking a Personal Loan for Wedding

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How Does a Loan Against FD Work?

The bank marks a lien on your FD, sanctions a loan of up to 90-95% of the deposit value, and disburses the amount as either a term loan or an overdraft. Interest is charged only on the amount you actually use, and the FD keeps earning its original rate in parallel.

The process behind a loan against fixed deposit is straightforward:

1. The bank or NBFC verifies the FD receipt or e-FD record linked to your account.
2. A lien is marked on the deposit, which means it cannot be withdrawn or closed until the loan is repaid.
3. A loan amount, usually 90% to 95% of the FD value, is sanctioned as an overdraft limit or a term loan.
4. Interest is charged on the drawn amount at a small margin above the FD’s own interest rate.
5. Once the loan is repaid or the FD matures, the lien is released and the deposit is free again.

If the loan is not repaid, the lender has the right to adjust the outstanding dues against the FD amount and interest accrued on it, which is why documentation and repayment schedules matter as much as the interest rate.

Loan Against Fixed Deposit Interest Rate

The loan against FD interest rate is usually 1% to 2.5% above the interest rate of the underlying fixed deposit. So if your FD earns 6.5% per annum, the loan against that FD typically costs between 7.5% and 9% per annum, well below the 10.5% to 16% charged on unsecured personal loans.

Rates differ slightly by lender and by how the loan is structured (overdraft versus term loan). Ruloans works with partner banks and NBFCs whose loan against FD interest rate policies are indicative of current market practice:

Lender Type	Indicative Loan Against FD Interest Rate	Maximum Loan Amount (% of FD Value)
Large public sector banks	FD rate + 1.00%	Up to 90%
Large private banks	FD rate + 2.00% to 2.50%	Up to 90%
Small finance banks/NBFCs	FD rate + 1.50% to 2.50%	Up to 90% to 95%

Figures are indicative and vary by lender, FD tenure, and internal credit policy. The exact loan against FD interest rate offered to you will be confirmed by the matched partner bank or NBFC at the time of sanction.

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Also Read: Understanding Personal Loan Interest Rates: Fixed vs. Variable

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Do You Know? The RBI’s Monetary Policy Committee kept the repo rate unchanged at 5.25% at its August 2026 review, the fourth consecutive hold of the year (after February, April, and June 2026). Because a loan against FD is priced off your own deposit’s rate rather than the market’s floating benchmark, this kind of rate stability means the FD-linked borrowing cost has stayed largely predictable through 2026, unlike unsecured personal loan rates, which move more with overall market lending trends.Source: Reserve Bank of India, Resolution of the Monetary Policy Committee, August 3–5, 2026

Is Loan Against FD Interest Rate Fixed or Floating?

The loan against FD interest rate is almost always fixed for the loan tenure, because it is pegged to the fixed rate of the underlying FD plus a constant margin, so it does not fluctuate with repo rate changes the way a floating-rate personal loan or home loan can.

How Much Loan Can You Get Against Your FD?

Most banks sanction 90% of the FD value as a loan, and some NBFCs go up to 95%. Minimum loan amounts can be as low as ₹5,000 to ₹25,000 depending on the lender, while the maximum is capped only by the size of your fixed deposit.

For example, an FD of ₹5,00,000 can typically fetch a loan against FD of ₹4,50,000 (at 90% margin), while an FD of ₹20,00,000 could fetch up to ₹18,00,000 to ₹19,00,000 depending on the lender’s margin policy. Under RBI’s Master Circular on Loans and Advances, Statutory and Other Restrictions (RBI/2006-07/43, DBOD No. Dir. BC. 9/13.03.00/2007-08 dated July 2, 2007), individual bank boards are permitted to set their own margin requirements on advances against a depositor’s own term deposits, which is why the exact percentage varies from one lender to another.

Fixed Deposit Amount	Loan at 90% Margin	Loan at 95% Margin
₹1,00,000	₹90,000	₹95,000
₹5,00,000	₹4,50,000	₹4,75,000
₹10,00,000	₹9,00,000	₹9,50,000
₹20,00,000	₹18,00,000	₹19,00,000

Loan Against Fixed Deposit vs Personal Loan: Which Is Cheaper?

A loan against fixed deposit is almost always cheaper than a regular personal loan because it is secured by your own money. It typically costs 7% to 9% per annum against 10.5% to 16% or more for an unsecured personal loan, and it does not require the same income or credit-score documentation.

Parameter	Loan Against Fixed Deposit	Regular Personal Loan
Interest rate	FD rate + 1% to 2.5% (approx. 7% to 9%)	10.5% to 16%+
Collateral	FD lien	None (unsecured)
CIBIL score check	Usually not required	Typically 700+ preferred
Processing time	Same day to 24 hours	1 to 5 working days
Processing fee	Nil to minimal	1% to 3% of loan amount
Impact on existing FD	FD continues earning interest	Not applicable

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Also Read: Gold Loan vs Personal Loan in India 2026: Which Is Cheaper and Faster?

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Worked Example: How Much Do You Actually Save?

On a ₹10,00,000 FD earning 6.5%, borrowing ₹9,00,000 against it at 8.5% costs a net effective rate of about 1.3% per year, because the FD interest you keep earning offsets most of the loan interest you pay.

• FD amount: ₹10,00,000 at 6.5% per annum
• Loan against FD: ₹9,00,000 (90% margin) at 8.5% per annum (FD rate + 2%)
• Annual interest payable on the loan: ₹9,00,000 x 8.5% = ₹76,500
• Annual interest still earned on the FD: ₹10,00,000 x 6.5% = ₹65,000
• Net additional cost for the year: ₹76,500 minus ₹65,000 = ₹11,500, an effective cost of roughly 1.28% on the ₹9,00,000 borrowed

Compare this with a personal loan of ₹9,00,000 at 12% per annum, which would cost roughly ₹1,08,000 in interest for the same year, with no offsetting return at all. This is the core reason a loan without breaking FD is one of the most cost-efficient borrowing options available to Indian savers.

Do You Know? RBI’s own banking data for April 2026 shows the weighted average lending rate on fresh rupee loans at 8.50%, against a weighted average fresh term deposit rate of just 5.77%, a gap of roughly 2.7 percentage points. That spread is effectively what a loan against FD lets you skip, since you borrow close to your own FD’s rate instead of the general market lending rate that regular personal loans are priced against.Source: RBI lending and deposit rate data for Scheduled Commercial Banks, reported by Hellobanker

Eligibility Criteria for Loan Against FD

Almost any FD holder above 18 years of age with an active fixed deposit is eligible for a personal loan against fixed deposit, since the FD itself is the primary security. There is no minimum salary requirement and, in most cases, no separate CIBIL score check.

Typical eligibility conditions across Ruloans‘ partner banks and NBFCs include:

• The applicant must be the sole or joint holder of the fixed deposit
• Minimum age of 18 years (minors’ FDs generally require a guardian’s consent)
• The FD must not already be pledged elsewhere or be a tax-saving FD under Section 80C in most banks
• FDs opened under compensation from a court or tribunal order require specific permission before being pledged
• NRE, NRO, and FCNR deposit holders are eligible with select partner banks, subject to FEMA guidelines

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Also Read: Personal Loan Without Guarantor or Collateral: Apply Now (2026 Guide)

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Documents Required for a Fixed Deposit Loan

A personal loan against fixed deposit needs minimal paperwork, typically just the FD receipt or e-FD confirmation, a filled loan/overdraft application form, KYC documents (PAN and Aadhaar), and a signature verification, since the deposit itself serves as the primary security for this fixed deposit loan.

• Original FD receipt or system-generated e-FD advice
• Loan or overdraft application form (physical or through net banking/mobile app)
• PAN card
• Aadhaar card or other KYC-compliant identity and address proof
• Passport-size photograph (for offline applications)

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Also Read: Personal Loan Against Salary Slip: Eligibility & Apply Online

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How to Apply for a Loan Against FD Without Breaking It

You can apply for a fixed deposit loan either online through net banking or a mobile banking app, or offline at the branch, by submitting the FD details and a simple application form. Ruloans helps you compare offers from multiple partner banks and NBFCs before you apply, so you get matched with a suitable lender and rate.

1. Compare offers: Check the loan against FD interest rate and margin offered by different partner banks and NBFCs through Ruloans instead of approaching a single lender directly.
2. Choose the FD to pledge: Select the fixed deposit you want to use as security; it should ideally have enough tenure left to comfortably cover your repayment period.
3. Submit the application: Apply online through the matched bank’s net banking or mobile app, or visit a branch with the required documents.
4. Lien marking and sanction: The bank marks a lien on the FD and sanctions the loan amount, usually as an overdraft limit linked to your savings account.
5. Disbursal: Funds are credited to your linked account, often on the same day, and the FD continues to earn interest as usual until the loan is repaid.

Because the FD is never withdrawn or closed during this process, this route lets you get a loan without breaking FD and without losing the preferential interest rate you locked in when the deposit was opened. In short, every step above is built around one goal: a loan without breaking FD, from application to disbursal.

Advantages of a Loan Against Fixed Deposit

The biggest advantages of a loan against fixed deposit are a lower interest rate than unsecured loans, minimal documentation, fast disbursal, and the fact that your FD continues to earn interest throughout the loan tenure.

• Lower interest rate: Typically 1% to 2.5% above the FD rate, well below personal loan rates
• No CIBIL score dependency: Since the FD loan is fully secured by your own deposit
• Fast processing: Many partner banks disburse an FD loan the same day through net banking or a mobile app
• FD keeps earning: The deposit is only pledged, not withdrawn, so interest continues to accrue
• Flexible repayment: Available as an overdraft (pay interest only on the amount used) or a term loan
• No prepayment penalty in most cases: Since there is no long-term unsecured exposure for the lender

Points to Know Before Taking a Loan Against FD

The main things to check before taking a loan against FD are that the deposit gets a lien marked on it until full repayment, the loan amount is capped by your FD value and cannot be increased later without a fresh FD, and default can lead to the lender adjusting the outstanding dues against the FD itself.

• The pledged FD cannot be withdrawn, renewed on the same terms, or used as security elsewhere until the FD loan is closed
• Tax-saving FDs under Section 80C are usually not eligible for this facility
• If EMIs are missed, the bank can recover the dues directly from the FD and its accrued interest
• The loan amount is capped by the FD value, so large one-time requirements may still need a separate credit line, since a loan without breaking FD only goes as far as the deposit’s margin allows

Loan Against FD vs Overdraft Against FD

A loan against FD is a one-time disbursal repaid over a fixed tenure, while an overdraft against FD is a revolving credit limit where you pay interest only on the amount withdrawn and can repay and redraw as needed within the sanctioned limit.

Parameter	Loan Against FD (Term Loan)	Overdraft Against FD
Disbursal	One-time, full sanctioned amount credited upfront	Credit limit set up; amount drawn as needed
Interest charged on	The entire disbursed amount	Only the amount actually withdrawn
Repayment structure	Fixed EMIs over a set tenure	Flexible; repay and redraw within the limit
Best suited for	One-time expenses (medical, wedding, travel)	Recurring or uncertain cash flow needs
Cost efficiency	Interest runs on full amount from day one	Lower overall interest if the full limit isn’t used at once
Availability	Offered by select banks/NBFCs	The more common structure across most Indian banks

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Also Read: Make an Ideal Choice Between Gold Loan & Personal Loan 

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Tax Implications of a Loan Against Fixed Deposit

Taking a loan against your fixed deposit has no direct tax benefit or tax liability by itself, but the interest your FD earns remains fully taxable as per your income tax slab, exactly as it would be if you had not taken the loan.

Since the FD is only pledged and not withdrawn, TDS on FD interest continues to apply under the usual income tax rules if the annual interest crosses the applicable threshold. The loan amount itself, being borrowed money and not income, is not taxable, and this holds true whether the facility is structured as an FD loan or as an overdraft.

Conclusion

A loan against fixed deposit remains one of the most cost-efficient ways to raise funds without disturbing your savings or losing your FD’s locked-in interest rate. Since the exact interest rate, margin, and processing timeline can vary from lender to lender, it helps to compare options before choosing one. 

Ruloans works with 275+ partner banks and NBFCs across 4,000+ Indian cities to match borrowers with a suitable loan against FD offer. Apply through Ruloans today to compare indicative rates and get matched with a partner bank or NBFC for your loan against FD, without breaking your fixed deposit. 

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