what are the interest rates for loan against FD at ICICI bank and other banks?
a loan against a fixed deposit is one of the cheapest borrowing options available in India. since the deposit itself serves as collateral, the lender faces minimal risk. the interest rate on the loan is typically the FD rate plus a small margin. this margin varies across banks and customer categories.
ICICI bank loan against FD interest rate
ICICI bank charges a spread over the FD interest rate. general customers pay the FD rate plus 2%. senior citizens get a better deal at FD rate plus 1%.
the bank offers up to 90% of the FD value as an overdraft (OD) or demand loan. the FD continues to earn interest at the original rate while pledged.
key features:
- interest rate: FD rate + 2% (general), FD rate + 1% (senior citizens)
- loan amount: up to 90% of FD value
- processing fee: nil
- prepayment charges: nil
- penal interest: 5% p.a. on overdue or overdrawn amounts
interest rates at other major banks
State Bank of India. SBI offers the most competitive margin at just 1% above the FD rate. the bank provides loans up to 90% of the FD value with no processing fee or prepayment charges.
HDFC bank. HDFC bank charges 2% above the FD rate, similar to ICICI bank. the loan amount goes up to 90% of the FD value. a minimum FD amount of ₹25,000 with a tenure of at least 6 months is required.
Axis Bank. Axis Bank offers loans up to 85% of the FD value in the form of an overdraft. prepayment charges are nil.
federal bank. federal bank provides loans up to 90% of the deposit amount with no processing fee or penal interest.
Bank of Baroda. Bank of Baroda charges a 1% margin over the FD rate, matching SBI's offering.
karur vysya bank. karur vysya bank offers loans up to 90% of the deposit amount with instant disbursal.
| bank | margin over FD rate | maximum loan amount |
|---|---|---|
| State Bank of India | 1% | up to 90% of FD value |
| ICICI bank | 2% (general), 1% (senior citizens) | up to 90% of FD value |
| HDFC bank | 2% | up to 90% of FD value |
| Axis Bank | varies | up to 85% of FD value |
| Bank of Baroda | 1% | varies |
| federal bank | varies | up to 90% of deposit amount |
| karur vysya bank | varies | up to 90% of deposit amount |
how interest calculation works
interest on a loan against FD applies only to the amount withdrawn, not the entire sanctioned limit. the FD keeps earning interest at its original rate throughout the loan period. the actual cost of borrowing is just the spread between the loan rate and the FD rate.
take a FD earning 7% interest. ICICI bank charges 2% above the FD rate, making the loan rate 9%. the borrower pays 9% on the amount taken out but continues to earn 7% on the full FD balance. the net cost works out to roughly 2%.
important considerations before applying
confirm the margin. rates vary by bank and customer category. senior citizens get better terms at ICICI bank.
check the loan amount. most banks offer up to 90% of the FD value. some banks like Axis Bank cap it at 85%.
verify processing fees. most banks charge nil processing fees for loans against FD. confirming this before applying is advisable.
understand repayment terms. the loan must be repaid before the FD matures. defaulting can lead to the bank liquidating the FD.
check the FD type. tax-saving fds with a 5-year lock-in can also be used for loans, but the FD cannot be broken before maturity.
frequently asked questions
1. what is the interest rate for a loan against FD at ICICI bank?
ICICI bank charges FD rate plus 2% for general customers and FD rate plus 1% for senior citizens.
2. how much can be borrowed against a FD at ICICI bank?
ICICI bank offers up to 90% of the FD value as an overdraft or demand loan.
3. does the FD continue to earn interest while pledged?
the fixed deposit (FD) continues to earn interest at the original rate while pledged as collateral.
4. are there any processing fees for a loan against FD?
most banks, including ICICI bank, SBI, and HDFC bank, do not charge processing fees for loans against FD.
5. what happens if the loan is defaulted?
the bank can liquidate the FD to recover the outstanding amount. ICICI bank also charges a penal interest of 5% p.a. on overdue amounts.
