Loan Against FD Calculator — Discovery Document
JTBD
“I need cash urgently but don’t want to break my FD and lose interest. How much can I borrow, what will it cost, and is it cheaper than breaking the FD?”
What is a Loan Against FD?
A loan against Fixed Deposit (also called overdraft against FD or demand loan against time deposit) lets you borrow up to 90% of your FD value by pledging the deposit as collateral. Your FD continues earning interest at the original rate while you pay a small margin (1-2%) above the FD rate on the borrowed amount. It is one of the cheapest forms of credit in India because the bank’s risk is essentially zero — they hold your money as collateral.
Key Product Parameters (Verified March 2026)
Loan-to-Value (LTV) Ratios
| Bank | LTV | Source |
|---|
| SBI | Up to 90% | sbi.co.in |
| HDFC Bank | Up to 90% | hdfcbank.com |
| ICICI Bank | Up to 90% | icicibank.com |
| Bank of Baroda | Up to 90% | bankofbaroda.in |
| PNB | Up to 85% | pnbindia.in |
Interest Rate Margins (over FD rate)
| Bank | Margin (General) | Margin (Senior Citizen) |
|---|
| SBI | 1.00% | 1.00% |
| HDFC Bank | 2.00% | 2.00% |
| ICICI Bank | 2.00% | 1.00% |
| Bank of Baroda | 1.00% | 1.00% |
| PNB | 1.00% | 1.00% |
FD Interest Rates (March 2026, General Public)
| Bank | Rate Range | Popular 1-Year Rate |
|---|
| SBI | 3.05-6.45% | 6.05% |
| HDFC Bank | 2.75-6.50% | 6.50% |
| ICICI Bank | 2.75-6.50% | 6.50% |
| Bank of Baroda | 3.00-6.50% | 6.25% |
| PNB | 3.00-6.50% | 6.25% |
SBI Amrit Vrishti (444 days): 6.45%. Senior citizens get 0.50-0.60% extra on FD rates.
Processing Fee
- SBI: Nil
- HDFC Bank: Nil
- ICICI Bank: Nil
- Bank of Baroda: Nil
- PNB: Nil
- Processing fee is nil at virtually all banks for loan against FD.
Prepayment Penalty
- No prepayment penalty at any major bank for loan/OD against FD.
- You can repay any amount at any time without charges.
FD Premature Withdrawal Penalties
| Bank | Penalty |
|---|
| SBI | 0.50% for FDs below Rs.5 lakh; 1% for FDs above Rs.5 lakh |
| HDFC Bank | 1.00% on applicable rate |
| ICICI Bank | 0.50-1.00% on applicable rate |
When breaking FD prematurely, the bank pays interest at the rate applicable for the period actually held (not the booked rate), minus the penalty. For example: if you booked a 2-year FD at 6.50% but break it after 10 months, the bank applies its 10-month rate (say 5.50%) minus 1% penalty = 4.50% effective rate.
Overdraft vs Term Loan
Overdraft (OD) Against FD
- Credit limit sanctioned against FD
- Withdraw and deposit any number of times
- Interest charged only on amount actually drawn (not full limit)
- Works like current account with credit facility
- Available through Internet Banking/Mobile App at SBI (YONO), HDFC, ICICI (iMobile)
- Best for: intermittent needs, uncertain amounts, revolving credit needs
Term Loan (Demand Loan) Against FD
- Full loan amount disbursed upfront
- Repayment via EMI or lump sum at maturity
- Interest on full principal from day one (reducing balance for EMI)
- Best for: one-time large expenses, structured repayment preference
- Tenure: remaining FD maturity or 120 months, whichever is earlier (SBI)
NRI Loans Against FD
- Available on NRE, NRO, and FCNR Fixed Deposits
- LTV: up to 90% for NRE/NRO; up to 85% for FCNR (select currencies)
- Maximum cap: Rs.5 crore (varies by bank)
- Loan disbursed in Indian Rupees
- Repayment via: direct remittance, NRO account, or FD adjustment at maturity
- FD cannot be prematurely closed while loan is outstanding
- Available at SBI, HDFC Bank, ICICI Bank, and most other banks
Net Cost Calculation
The real insight of loan against FD is the net cost:
- Your FD earns: 6.50% p.a. on full FD amount
- You pay: 7.50% p.a. on loan amount (at SBI with 1% margin)
- If loan = 80% of FD, net annual cost = approx. 1% of loan amount
- On Rs.8 lakh loan for 12 months at SBI: net cost = ~Rs.8,000
Compare with personal loan at 12-18% p.a. = Rs.96,000-Rs.1,44,000 interest on same amount. Loan against FD is 12-18x cheaper.
When Loan Against FD Does NOT Make Sense
- You need more than 90% of FD — breaking FD is the only option
- FD is about to mature in 1-2 months — just wait for maturity
- Your FD rate is very low (e.g., 3%) — the loan rate will still be 4-5%, and net cost advantage shrinks
- You have a high-interest savings account or liquid fund yielding more than the FD — explore other options first
Tax Implications (FY 2025-26)
- FD interest is fully taxable at your income tax slab rate
- Loan interest is NOT tax-deductible (unless used for business/property)
- Section 80C tax-saving FD: loan is available, but FD cannot be broken before 5 years
- TDS at 10% on FD interest above Rs.40,000 (Rs.50,000 for senior citizens) — this applies regardless of whether loan is taken
Common Use Cases
- Medical emergency — need cash today, FD matures in 6 months
- Wedding expenses — large one-time outflow, repay from upcoming bonus
- Business cash flow gap — use OD facility, pay interest only when drawn
- Down payment for property — bridge funding until home loan disburses
- Education fees — semester fees due, salary increment expected soon
Sources
- SBI Loan Against Time Deposit (sbi.co.in)
- HDFC Bank Loan Against FD (hdfcbank.com)
- ICICI Bank Overdraft Against FD (icicibank.com)
- Bank of Baroda Loans Against Deposits
- RBI guidelines on NRI deposits
- PaisaBazaar Loan Against FD comparison (March 2026)
- BankBazaar FD premature withdrawal penalties