A fixed deposit (FD) is a popular savings option in India, offering guaranteed returns over a fixed period. However, life can be unpredictable, and you may need funds for unexpected expenses like medical emergencies, education, or home improvements. Breaking an FD prematurely often incurs penalties and loss of interest. The State Bank of India (SBI) offers a smarter solution: a loan against fixed deposit, allowing you to borrow against your FD without liquidating it.

This comprehensive guide explores SBI’s loan against FD, covering eligibility, application process, interest rates, repayment options, and more. Whether you’re a salaried individual, a business owner, or an NRI, this article will help you understand how to leverage your SBI FD for quick, affordable funding.

What is a Loan Against Fixed Deposit in SBI?

A loan against an FD is a secured loan where your fixed deposit serves as collateral. Instead of withdrawing your FD and losing interest, you can borrow up to 90% of its value. SBI offers two types of loans against FDs:

• Demand Loan: A fixed loan amount with regular Equated Monthly Instalments (EMIs).
• Overdraft Facility: A flexible credit line where you can withdraw funds as needed and pay interest only on the amount used.

This facility ensures your FD continues to earn interest while providing liquidity for your financial needs.

Why Choose SBI for a Loan Against FD?

SBI, India’s largest public sector bank, has been a trusted name since 1955. Its loan against FD is popular due to:

• Competitive Interest Rates: Only 1% above your FD rate, significantly lower than personal loans or credit card debt.
• No Processing Fees: Saves you money compared to other loan types.
• No Prepayment Penalties: Repay early without extra costs.
• Quick and Easy Process: Online applications via YONO or internet banking are fast and convenient.
• Trusted Institution: SBI’s reputation ensures reliability and transparency.

Key Features of SBI Loan Against FD

Here’s a detailed look at the features of SBI’s loan against FD:

• Loan Amount: You can borrow up to 90% of your FD’s value, ensuring significant liquidity. For example, if your FD is worth ₹10 lakh, you can borrow up to ₹9 lakh.
• Interest Rate: The rate is 1% higher than your FD’s interest rate. If your FD earns 6%, the loan rate is 7%, making it cost-effective.
• No Extra Costs: SBI charges no processing fees or penalties for early repayment, unlike many other loans.
• Flexible Options: Choose between a demand loan for fixed needs or an overdraft for ongoing expenses.

Eligibility Criteria for a loan against FD in SBI

To apply for a loan against an FD in SBI, you must meet these criteria:

• Age: At least 21 years old.
• FD Ownership: Must have an active SBI fixed deposit (TDR, STDR, RD, e-TDR, e-STDR, NRE, NRO, or FCNR(B)) that has not matured.
• Account Type:
  • Single Account Holders: Can apply for overdrafts online via YONO or internet banking if the FD was issued through these channels.
  • Joint Account Holders: Can apply for both demand loans and overdrafts at a branch, with consent from all account holders.
• Businesses: Sole proprietorships or partnership firms with SBI FDs are eligible.
• Exclusions: Loans are not available against FDs in the name of minors or tax-saving FDs (e.g., SBI Tax Savings Scheme, 2006).

How to Apply for an SBI Loan Against an FD

SBI offers two application methods: online (for overdrafts) and offline (for both demand loans and overdrafts).

Online Application (Overdraft Facility)

1. Log In: Access your SBI internet banking or YONO app using your credentials.
2. Navigate to Loans: Go to the ‘Loans’ section and select ‘Loans Against Securities.’
3. Select Loan Option: Choose ‘Loan Against Time Deposit’ and click ‘Apply Now.’
4. Choose FD: Select the FD you want to use as collateral.
5. Enter Loan Amount: Specify the amount (up to 90% of FD value, minimum ₹5,000).
6. Authenticate: Enter the NetSecurity password sent to your registered mobile number.
7. Submit: Confirm details and submit the application. Funds are disbursed quickly upon approval.

Offline Application (Demand Loan or Overdraft)

1. Visit a Branch: Go to your nearest SBI branch.
2. Fill Application Form: Complete the loan application form provided by the bank.
3. Submit FD Details: Provide your FD receipt or account details.
4. Provide KYC Documents: If not already on file, submit identity and address proof (e.g., Aadhaar, PAN).
5. Approval and Disbursal: The bank will process your application and disburse the loan upon verification.

Documents Required for a loan against FD in SBI

For existing SBI customers, documentation is minimal:

• Online Application: No additional documents are needed, as your details are already with the bank.
• Offline Application:
  • FD receipt or account statement.
  • Identity proof (e.g., Aadhaar, PAN, passport).
  • Address proof (if not already updated).
  • For joint accounts, consent from all account holders is required.

Interest Rates and Charges of a loan against FD in SBI

The interest rate for an SBI loan against an FD is 1% above the FD’s interest rate. For example:

• FD Rate: 6% per annum.
• Loan Rate: 7% per annum.

The interest is calculated on a daily reducing balance, meaning you only pay interest on the outstanding amount each day, reducing costs if you repay early. For overdrafts, this is particularly beneficial, as you only pay for the amount you use.

Example Calculation:

Suppose you have an FD of ₹5,00,000 earning 6% interest. You take a loan of ₹4,50,000 (90% of the FD value) at 7% interest as an overdraft. If you use ₹2,00,000 for 30 days and repay it:

• Interest = (₹2,00,000 × 7% × 30/365) = ₹1,643 (approx.).
• Your FD continues to earn 6% interest, offsetting part of the loan cost.

The effective cost is the difference (1%), making it a low-cost borrowing option.

Repayment Options of a loan against FD in SBI

SBI offers flexible repayment options based on the loan type:

• Overdraft Facility:
  • Repay any time within the FD’s remaining maturity or 5 years (whichever is earlier).
  • Interest is charged only on the amount used, calculated daily.
  • Online overdrafts must be repaid by FD maturity; branch overdrafts can be renewed at the branch.
• Demand Loan:
  • Repaid through fixed EMIs over a tenure up to the FD’s remaining maturity or 10 years (whichever is earlier).
  • The repayment schedule is tailored to your financial capacity.

Repayment Tips:

• For Overdrafts: Repay as soon as possible to minimise interest, as it’s calculated daily.
• For Demand Loans: Stick to the EMI schedule to avoid default.
• Use FD Interest: The interest earned on your FD can help offset loan interest or cover EMIs.

Pros and Cons of SBI Loan Against FD

Pros

• Low Interest Rates: Only 1% above FD rate, much lower than personal loans (10-15%) or credit card debt (30-40%).
• No Credit Check: Since the FD is collateral, your credit score doesn’t matter.
• Preserve FD: Continue earning interest on your FD without breaking it.
• No Extra Costs: No processing fees or prepayment penalties.
• Flexible Options: Choose between a demand loan for fixed needs or an overdraft for ongoing expenses.
• Quick Disbursal: Online applications are processed swiftly.

Cons

• FD Locked: You cannot withdraw the FD until the loan is fully repaid.
• Risk of FD Loss: If you default, the bank can liquidate your FD to recover the loan.
• Limited Loan Amount: Capped at 90% of FD value, so you can’t access the full amount.
• Joint Account Restrictions: Online overdrafts are not available for joint accounts; all holders must consent for branch applications.

Potential Risks

• Default Risk: If you fail to repay, SBI can use your FD to settle the loan, potentially disrupting your savings plan.
• Net Interest Cost: While the FD earns interest, the loan’s higher rate (1% above the FD) means a net cost, though minimal.
• FD Maturity: The loan tenure cannot exceed the FD’s remaining maturity, so plan accordingly.
• Non-Eligible FDs: Loans are not available against tax-saving FDs or FDs in minors’ names.

Things to Consider Before Applying

Before taking a loan against your SBI FD, keep these points in mind:

• Compare Interest Rates: Ensure the loan rate (FD rate + 1%) is lower than other available loans.
• Repayment Capacity: Assess your ability to repay to avoid default and loss of FD.
• Loan Purpose: Use a demand loan for one-time expenses (e.g., home renovation) and an overdraft for recurring needs (e.g., business expenses).
• FD Tenure: Ensure the FD’s remaining maturity aligns with your loan repayment plan.
• Alternative Options: If you need more than 90% of the FD value, consider other loan types, though they may have higher rates.

Difference Between Demand Loan and Overdraft

Example Scenario:

• Demand Loan: You need ₹3 lakh for a medical procedure. A demand loan provides a fixed amount with predictable EMIs.
• Overdraft: You’re a business owner needing funds for fluctuating expenses. An overdraft lets you withdraw and repay as needed, minimising interest.

Using the SBI YONO App for Loan Against FD

The SBI YONO app is a convenient platform for applying for an overdraft against your FD. Here’s how it works:

1. Download YONO: Available on Google Play Store or Apple App Store.
2. Log In: Use your SBI internet banking credentials.
3. Select Loan Option: Navigate to ‘Loans’ and choose ‘Loan Against Fixed Deposit.’
4. Choose FD: Select the eligible FD (TDR/STDR issued via YONO/INB).
5. Enter Amount: Specify the loan amount (₹5,000 to 90% of FD value).
6. Authenticate and Submit: Verify with the OTP or NetSecurity password.

The YONO app is user-friendly, and the process is seamless for single account holders with eligible FDs.

Frequently Asked Questions (FAQs)

1. Can I get a loan against an NRE/NRO or FCNR(B) FD?
   • Yes, SBI allows loans against NRE, NRO, and FCNR(B) deposits for both residents and NRIs.
2. What happens if I don’t repay the loan?
   • The bank can liquidate your FD to recover the outstanding loan amount, including interest.
3. Can I close my FD before repaying the loan?
   • No, the FD remains locked until the loan is fully repaid.
4. Is a loan available against a tax-saving FD?
   • No, loans against SBI Tax Savings Scheme FDs are not permitted.
5. Can joint account holders apply online?
   • Currently, online overdrafts are available only for single account holders. Joint holders must apply at a branch with consent from all holders.
6. What is the minimum loan amount?
   • For online overdrafts, the minimum is ₹5,000; for branch applications, it may be ₹25,000.

Conclusion

SBI’s loan against fixed deposit is a smart, low-cost way to access funds without breaking your FD. With interest rates just 1% above your FD rate, no processing fees, and flexible repayment options, it’s an attractive option for emergencies or planned expenses. Whether you choose a demand loan for fixed needs or an overdraft for flexibility, SBI ensures a hassle-free process through its YONO app, internet banking, or branches.

If you have an SBI FD and need quick funds, this loan is worth considering. Always assess your repayment capacity to protect your savings and consult with SBI for personalised advice.

References

• SBI Official Website – Loan Against Time Deposit
• SBI YONO – Loan Against Fixed Deposit
• Groww – SBI Loan Against FD
• IndMoney – SBI Loan Against Fixed Deposit
• StableMoney – SBI Loan Against FD
• PolicyBazaar – Loan Against SBI Fixed Deposit
• BankBazaar – Loan Against FD SBI
• Paisabazaar – SBI Loan Against Fixed Deposits
• ETMoney – SBI Bank FD Rates
• ClearTax – SBI FD Interest Rates 2025