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Loan Against FD: How Much Money Can SBI Customers Borrow Without Breaking Their Fixed Deposit? Interest Rate and Key Details Explained

When you suddenly need money, choosing the right loan can be confusing. There are many options available—personal loans, home loans, gold loans, and credit cards. Each comes with its own interest rate, paperwork, and repayment pressure. But what if you already have money safely invested in a Fixed Deposit (FD)?

In such cases, a loan against Fixed Deposit can be one of the smartest and cheapest borrowing options. India’s largest public sector bank, State Bank of India, offers a convenient loan against Time Deposit that allows customers to borrow money without breaking their FD.

This article explains everything you need to know about SBI’s loan against FD—how much you can borrow, interest rates, eligibility, repayment rules, and whether this loan is right for you.

Loan Against FD: How Much Money Can SBI Customers Borrow Without Breaking Their Fixed Deposit? Interest Rate and Key Details Explained

What Is a Loan Against Fixed Deposit?

A loan against Fixed Deposit is a secured loan where your FD acts as collateral. Instead of closing your FD and losing interest benefits, the bank gives you a loan by placing a lien on your deposit.

You continue earning interest on your FD, while paying a small additional interest on the loan amount. Because the loan is secured, interest rates are much lower compared to personal loans.

SBI calls this facility Loan Against Time Deposit, and it is available in both Demand Loan and Overdraft formats.

How Much Loan Can SBI Customers Get Against FD?

One of the biggest advantages of SBI’s loan against FD is the high loan value.

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

  • Example:
    If your FD amount is ₹5 lakh, you can borrow up to ₹4.5 lakh

Minimum and Maximum Loan Amount

  • Minimum loan (online overdraft): ₹5,000

  • Maximum loan (online overdraft): ₹5 crore

This makes the scheme useful for both small personal needs and large business or investment requirements.

Types of Loan Available

SBI offers two types of loan facilities against Time Deposits:

1. Demand Loan (DL)

  • Lump sum loan credited to your account

  • Fixed repayment period

  • Suitable if you need money at once for a specific purpose

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

2. Overdraft (OD)

  • Withdraw money as and when required

  • Interest charged only on the amount used

  • Ideal for flexible or uncertain cash needs

Interest Rate on SBI Loan Against FD

Interest rate is one of the strongest reasons to choose this loan.

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

Example:

If your FD earns 6.5% interest, the loan interest will be 7.5% per annum.

Other Interest Benefits:

  • Interest charged on daily reducing balance

  • Much cheaper than personal loans (which often exceed 12–15%)

Key Features of SBI Time Deposit Loan

Here are the main highlights of the scheme:

  • Loan up to 90% of FD value

  • Low interest rate (FD rate + 1%)

  • No processing charges

  • No prepayment penalty

  • Flexible loan types: Demand Loan or Overdraft

  • FD continues to earn interest

  • Simple documentation

  • Available both online and at branches

Margin Requirement Explained

Margin refers to the portion of FD value that cannot be borrowed.

Margin Rules:

  • For Demand Loan and Overdraft up to 5 years:
    Minimum 10% margin

  • For Demand Loan above 5 years and up to 10 years:
    Minimum 15% margin

The loan tenure or remaining FD maturity—whichever is earlier—will be considered.

Security for the Loan

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

  • FD remains in your name

  • You cannot prematurely withdraw the FD until the loan is cleared

How to Apply: Online or Branch?

SBI allows customers to apply for loan against FD through different channels.

Online (YONO / Internet Banking – INB)

  • Only Overdraft facility available

  • Only for single account holders

  • FD must be created through YONO or INB

  • No branch visit required

Through SBI Branch

  • Both Demand Loan and Overdraft available

  • Available for single and joint account holders

  • Wider eligibility and renewal options

Eligibility Criteria

Through Branch:

  • Customers holding:

    • TDR / STDR

    • Recurring Deposit (RD)

    • NRE / NRO deposits

    • FCNR(B) deposits

  • Single or joint account holders are eligible

Through YONO / INB:

  • Only single account holders

  • Only against TDR/STDR

  • Joint holders are not eligible currently

Repayment Rules Explained

Demand Loan Repayment

  • Repayment tenure:
    Remaining FD maturity or 120 months, whichever is earlier

  • If not repaid, loan is adjusted at FD maturity

Overdraft Repayment

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

  • OD accounts opened through branches can be renewed

  • OD accounts opened via YONO/INB must be closed at FD maturity

Why Loan Against FD Is Better Than Breaking FD

Many people prematurely close their FD during emergencies. This often leads to:

  • Loss of interest

  • Penalty charges

  • Lower effective returns

A loan against FD helps you:

  • Meet urgent cash needs

  • Keep FD intact

  • Maintain financial discipline

  • Save on interest cost

Who Should Consider SBI Loan Against FD?

This loan is ideal for:

  • Emergency expenses

  • Business cash flow needs

  • Short-term investment opportunities

  • Education or medical expenses

  • Avoiding high-interest personal loans

Final Thoughts

A loan against Fixed Deposit from SBI is a safe, affordable, and flexible borrowing option. With low interest rates, zero processing fees, and high loan eligibility, it is far more economical than unsecured loans.

If you already have an FD with SBI and need funds without disturbing your long-term savings, this loan can be a smart financial move. Whether you apply online through YONO or visit a branch for more options, SBI’s loan against Time Deposit offers convenience with peace of mind.

Before applying, always compare your actual need, repayment capacity, and FD maturity to make the most of this facility.

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