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Loan Against FD - Kotak Mahindra Bank

There are sudden emergencies for money, which will lead to liquidating fixed deposits. Instead, Kotak Mahindra Bank can offer you a loan against your fixed deposit without having to liquidate it.

What is Loan Against FD Kotak?

Loan Against Fixed Deposit Kotak Bank is when you can use your fixed deposit as collateral to take a loan. The bank would give you a loan of up to 90% of the value you hold in your fixed deposit account.

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Characteristics of a Kotak Mahindra Bank Loan Against Fixed Deposit

Mentioned here are the features of a loan against FD from Kotak Mahindra Bank:

  • Loan amount of 90 per cent

You can borrow between 70 and 90 per cent of your fixed deposit amount. So if you have a fixed deposit of, say, Rs. 10 lakhs, you can get anything between Rs. 7 lakhs and Rs. 9 lakhs. 

Even after the loan has been approved, the remaining cash in the fixed deposit account will continue to generate interest. 

  • Flexibility

One crucial factor to remember is that the loan against a fixed deposit has the same term as the fixed deposit. Therefore, while the loan might have a shorter term than the fixed deposit, it cannot have a longer term than the deposit. For example - if the Fixed Deposit time period is five years, the loan could be less than or equal to a period of 5 years but not greater than that.

  • Easy Application

This is a loan that is relatively simple to obtain. There is little documentation needed as you already have a fixed deposit account. You only need to finish the necessary forms, and you can also apply for a loan against a fixed deposit online.

  • No Processing Fee

This is a straightforward loan. There is no need to pay any added processing fee, as is the case with other loans. As a result, the overall cost of the loan is reduced.

  • Better Choices

Unfortunate circumstances, catastrophes, and unexpected developments may cause many people to withdraw funds from their fixed deposit accounts for immediate cash flow. However, with the option of taking out a loan against your fixed deposit, you can maintain your deposit while meeting your immediate cash demands.

  • Lower Rates

Loans against fixed deposits have substantially lower interest rates than other loan types. Let us suppose that it is only 2% to 3% higher than the fixed deposit rate. If your bank gives 9.25 % on fixed deposit accounts, you will have to pay 11.25 % against FD. This is far lower than the average interest rate charged on personal loans.

Eligibility for Loan Against Fixed Deposit 

While receiving a loan against an FD may appear simple, remember that there are specific conditions you must follow to get a loan against an FD. The following are the requirements for becoming eligible for such a loan:

  • First, you must have one to qualify for a loan against a fixed deposit.
  • This scheme does not apply to a fixed deposit in the name of a minor.
  • The amount of the fixed deposit should be more than the amount of the loan.
  • The loan's payback term cannot be longer than the fixed deposit's duration.
  • For example, a person with a five-year tax-saving FD cannot take a personal loan against it.

How to Get a Loan Against FD from Kotak Mahindra Bank?

There is no reason to prematurely redeem FDs because they can be used to get loans. Kotak Mahindra Bank allows account holders to apply for loans through their internet banking accounts. You can visit the nearest branch if your preferred financial institution does not offer online services. 

To begin, you must submit an application form, the relevant documents, and the FD receipt.

Step-by-Step Process for Online Application of Loan Against an FD

  • Step 1: Enter your user ID and password to access your internet banking account.
  • Step 2: Select the overdraft facility against FD in the fixed deposit section.
  • Step 3: Provide pertinent information such as the loan amount, term, etc.
  • Step 4: The loan acceptance process is completed online, and you will be notified by email and SMS.

Required Documents for the Process

  • A completed Application Form
  • The set deposit has been received.
  • An ECS mandate is required for non-cumulative FD.
  • A voided cheque is necessary for a non-cumulative FD.

Overdraft Option

The Kotak Mahindra Bank provides overdraft facilities in exchange for a personal loan against an FD. An overdraft facility is a financial tool that allows you to withdraw money from your bank account (savings or current) even if there is no balance

When you use the overdraft facility, you will be charged interest like any other credit facility.

FAQs

Q1. Should I take a personal loan from Kotak Mahindra Bank, or should I take a loan against my fixed deposit?

The smarter choice to choose is to take a loan against FD instead of a personal loan from Kotak Mahindra Bank because of the following reasons:

  • The interest rates over the loan are much less than a personal loan.
  • There is no processing fee or extra charges that you would have to pay.
  • You will not have to wait for approval to avail of the loan. 
  • You can choose to pay it off as long as you have the FD in the bank.

Q2. Are there any charges if I close my loan beforehand?

No, there are no prepayment charges for the loan against FD from Kotak Mahindra Bank.

Q3. How much loan amount can I take against my fixed deposit from Kotak Mahindra Bank?

You can avail yourself of up to 90% of the balance in your fixed deposit account.

Q4. What is the processing fee to get a loan against my fixed deposit from Kotak Mahindra Bank?

There are no processing fees for a loan against FDs from Kotak Mahindra Bank.

Q5. Can my FD mature before the repayment of the loan?

No, your FD plays as collateral.

Comparison of FD rates

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Tenure
Highest Interest Rates
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