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Loan Against Fixed Deposit: How SBI Customers Can Unlock Up to 90% of Their FD Value Without Breaking It

In times of financial need, choosing the right loan can make a big difference to your overall financial health. While options like personal loans, credit cards, or gold loans are easily available, they often come with high interest rates and strict repayment conditions. However, if you already have money parked safely in a Fixed Deposit (FD), there is a much smarter and cheaper alternative—loan against Fixed Deposit.

India’s largest public sector bank, State Bank of India, offers a Loan Against Time Deposit facility that allows customers to borrow funds without prematurely closing their FD. This loan is affordable, flexible, and easy to avail, making it one of the most practical borrowing options.

In this article, we explain in detail how much money SBI customers can borrow against their FD, the interest rate charged, eligibility conditions, application channels, and repayment rules.

Loan Against Fixed Deposit: How SBI Customers Can Unlock Up to 90% of Their FD Value Without Breaking It

What Is a Loan Against Fixed Deposit?

A loan against Fixed Deposit is a secured loan where your FD acts as collateral. Instead of breaking your FD and losing interest benefits, SBI places a lien on the deposit and provides you with a loan.

The key advantage is that:

  • Your FD continues to earn interest

  • You get immediate liquidity

  • The loan interest rate is much lower than unsecured loans

Because the bank already has your deposit as security, the risk is low, and so is the cost of borrowing.

How Much Can You Borrow Against Your FD?

SBI allows customers to borrow a significant portion of their FD value.

  • Maximum loan amount: Up to 90% of the Fixed Deposit value

Example:

If you have an FD of ₹10 lakh, you can get a loan of up to ₹9 lakh.

Minimum and Maximum Limits (Online Overdraft)

  • Minimum loan amount: ₹5,000

  • Maximum loan amount: ₹5 crore

This wide range makes the facility suitable for individuals, professionals, and even businesses with large deposits.

Types of Loan Facilities Offered by SBI

SBI provides two types of loan facilities against Time Deposits:

1. Demand Loan

  • A one-time lump sum amount is credited to your account

  • Fixed repayment schedule

  • Best suited for planned expenses like education fees or major purchases

Note: Demand Loan facility is available only through branches and not against non-callable deposits via online channels.

2. Overdraft Facility

  • Withdraw funds as and when required

  • Interest charged only on the amount actually used

  • Ideal for emergency needs or fluctuating cash requirements

Interest Rate on SBI Loan Against FD

One of the biggest advantages of this loan is its low interest rate.

  • Interest Rate:
    1% above the applicable Fixed Deposit interest rate

Example:

If your FD earns 6.75%, the loan interest rate will be 7.75% per annum.

Additional Interest Benefits:

  • Interest calculated on daily reducing balance

  • Much cheaper compared to personal loans or credit card borrowing

Key Features of SBI Time Deposit Loan

Here are the major highlights of SBI’s loan against FD scheme:

  • Loan up to 90% of FD value

  • Low and transparent interest rate

  • No processing fees

  • No prepayment or foreclosure charges

  • Choice of Demand Loan or Overdraft

  • FD continues to earn interest during the loan period

  • Simple documentation and quick approval

Margin Requirement Explained

Margin refers to the portion of FD value that the bank does not lend.

SBI Margin Rules:

  • Up to 5 years tenure:
    Minimum 10% margin (for both Demand Loan and Overdraft)

  • More than 5 years and up to 10 years (Demand Loan only):
    Minimum 15% margin

The applicable margin depends on the loan tenure or the remaining maturity period of the FD, whichever is earlier.

Security for the Loan

  • The loan is secured by placing a lien on the underlying Fixed Deposit

  • The FD remains in your name

  • Premature withdrawal of FD is not allowed until the loan is fully repaid

How to Apply for SBI Loan Against FD?

SBI offers multiple channels to apply for this loan.

Through YONO and Internet Banking (INB)

  • Only Overdraft facility available

  • Only for single account holders

  • FD must be created through YONO or INB

  • Fully digital process, no branch visit required

Through SBI Branch

  • Both Demand Loan and Overdraft facilities available

  • Available for single and joint account holders

  • Suitable for customers with special deposit types or longer tenures

Eligibility Criteria

Through Branch:

Customers holding the following deposits can apply:

  • TDR / STDR

  • Recurring Deposit (RD)

  • NRE / NRO deposits

  • FCNR(B) deposits

Both single and joint account holders are eligible.

Through Online Channels (YONO/INB):

  • Only single account holders

  • Only against TDR and STDR

  • Joint account holders are not currently eligible

Repayment Rules and Tenure

Demand Loan Repayment

  • Tenure: Remaining maturity period of the FD or 120 months, whichever is earlier

  • If not repaid, the loan amount is adjusted at FD maturity

Overdraft Repayment

  • Maximum tenure: 5 years or FD maturity, whichever is earlier

  • Overdrafts taken through branches can be renewed

  • Overdrafts taken via YONO/INB must be closed at FD maturity

Why Loan Against FD Is Better Than Breaking Your Deposit

Many people break their FD during emergencies, which results in:

  • Loss of interest

  • Penalty charges

  • Reduced long-term savings

A loan against FD helps you:

  • Preserve your savings

  • Avoid penalties

  • Get funds at a low interest rate

  • Maintain financial stability

Who Should Opt for SBI Loan Against FD?

This loan is ideal for:

  • Emergency expenses

  • Medical or education costs

  • Short-term business needs

  • Temporary cash flow gaps

  • Avoiding high-interest personal loans

Final Takeaway

A loan against Fixed Deposit from SBI is one of the safest and most cost-effective borrowing options available today. With low interest rates, zero processing charges, and flexible repayment options, it allows you to meet urgent financial needs without sacrificing your long-term savings.

If you already have a Fixed Deposit with SBI and need funds for a short or medium-term requirement, this facility can be a smart financial decision. As always, assess your repayment capacity and FD maturity before availing the loan to make the most of this convenient offering.

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