FD Loans Hit ₹2L Crore: Is Your FD Working Hard Enough?

Loans against fixed deposits have jumped 43% in one year to over ₹2 lakh crore. This means more Indians are using FDs as instant collateral instead of breaking them — and it could save you thousands in interest and penalty charges.

Here's what happened: Bank loans against fixed deposits surged 43.2% in a year to reach ₹2.04 lakh crore, growing far faster than overall bank credit during the same period.. The sharp rise signals that more Indian savers — salaried workers and small business owners — are choosing to borrow against their FDs instead of prematurely closing them to raise cash.. This trend has grown alongside rising FD interest rates, which make LAFD more attractive because the net cost of borrowing (loan rate minus FD earnings) stays very low..

What you should do: Check your bank's app or net banking today — most PSU and private banks now let you apply for a loan against your FD in under 10 minutes without visiting a branch.. Compare the LAFD rate at your bank against any personal loan or credit card offer you've received — if the gap is more than 4%, the FD loan almost always wins.. Avoid breaking your FD prematurely for short-term cash needs — premature closure attracts a 0.5-1% penalty on the FD rate AND you lose future interest; a loan against FD avoids both..

If you hold a joint FD, you can still get a loan against it — but all account holders must sign the loan application. Do this before an emergency, not during one.