How to get Personal Loans against Fixed Deposits

Many top banks offer their customers personal loans against fixed deposits. One of the main advantages of acquiring personal loans against fixed deposits is that the interest rates offered are comparatively lower compared to stand alone personal loans as the former is secured against deposits. It is important to note that loan seekers can avail of personal loans to fulfill their financial requirements without liquidating their fixed deposits.
Features of personal loans against fixed deposits

Some of the salient features of personal loans against fixed deposits are listed below:

Eligibility: Personal loans against fixed deposits can be availed by individuals above 21 years, private limited companies, sole proprietorship, private limited companies, partnership firms and stock brokers among others

Rate of interest: Most banks charge around 1 to 2% higher than their fixed deposit interest rates for personal loans against fixed deposits. Consequently, borrowers can save a lot of money which otherwise would have to paid as interest for conventional personal loans which are unsecured

Interest on fixed deposit: Fixed deposit holders can continue to earn interest on their fixed deposits even after they availed personal loans against the former

Convenient: In most cases, banks offer loans against fixed deposits courtesy the overdraft facility against the fixed deposit

Loan amount: In most cases, banks provide a loan against 70 to 90% of a fixed deposit account. However, the actual amount may vary from bank to bank and the fixed deposit amount

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Repayment: In case an individual does not repay his loan on time, the bank may foreclose his or her fixed deposit account to recover the loan amount. In other words, the duration of a personal loan taken against a fixed deposit account does not exceed the residual tenure of a fixed deposit. Loans against fixed deposits can be paid in the form of EMIs

Accessibility: Personal loans against fixed deposits are easier to obtain than standalone personal loans as the former requires simple documentation such as fixed deposit receipts,  overdraft agreement and lien letter among others

Prepayment penalty: In most cases, banks do not charge any prepayment penalties in terms of repayment of personal loans against fixed deposits

Loan foreclosure: Most banks do not levy any penalties for foreclosure on personal loans against fixed deposits

Processing fees: In most cases, banks do not charge any processing fees for loans against fixed deposits. However, some banks may levy low processing fees for the same

Fixed deposits: It is important to note that fixed deposit account holders cannot break their deposits after availing of loans against them owing to the ‘right to lien’ clause imposed by most banks

Tax benefits: Loan seekers cannot avail of any tax benefits for interest on personal loans against fixed deposits

Facilities: Individuals can avail of various facilities such as cheque book, internet banking and debit card on personal loans taken against fixed deposits

Documentation required: The most common documents required for acquiring personal loans against fixed deposits are listed below:

Signed Loan Agreement

Filled-in Application form

Fixed Deposit receipts

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Loans she can take, for her business

With start-ups mushrooming across the country, women entrepreneurs are not left behind. Today, women have a ray of hope when it comes to financing their dream. In order to promote entrepreneurship among women, many commercial and nationalized banks are willing to provide women entrepreneurs with finance for their businesses. Whether it is setting up a beauty parlour, restaurant, bakery, food catering, tailoring unit, etc., banks are very eager to provide women with finance to turn their aspirations to start a business into a reality.

The kinds of loans available for women entrepreneurs

Many banks are offering attractive lending opportunities for women entrepreneurs, these loans will be advantageous in terms of interest rates and provide them with relaxation with respect to collateral as well. Interest rates for these loans will be based at the bank’s discretion, but the will generally tend to be lesser than regular loans.

●   Bharatiya Mahila Bank (BMB), an all-women’s bank, provides women with collateral free loans, in order to promote their self-sustenance. Women can apply for loans from the BMB f or amounts up to Rs. 1 crore, without the need of collateral.

●    The Stree Shakthi Package for Women Entrepreneurs, provides loans to small businesses which are owned by women, with at least a 50% share. With this scheme women will receive assistance to start a business with a concession on the rate of interest of 0.50%  for a loan amount of at least Rs. 2 lakhs.

●    Cent Kalyani scheme, this is a loan scheme provided to women entrepreneurs, from Central Bank of India. With this loan women can start a new business venture or expand an existing one. It can be availed for retailers, women entrepreneurs in agriculture, village and cottage industry related, etc.

●   Annapurna scheme is applicable for women entrepreneurs who are running a business in the food industry. This can be applied for as individual business or partnership firms. The loan will be a term loan, and will be a maximum amount of Rs. 50,000, which can be repaid in 36 months. The women can use this finance as working capital for purchase of raw materials, small equipment’s like water filters kitchen equipment, utensils, etc. The purchases made with this loan amount will be considered the collateral for this loan.

●  Mahila Udyam Nidhi Scheme will provide women entrepreneur’s financial assistance up to Rs. 10 lakhs. This loan will be available under the Small Industries Development Bank of India. This will help with setting up of new small scale industrial ventures.

There are many more schemes, offered by various banks such as State Bank of India, Canara Bank, they have special cells to help women entrepreneurs get the required finance. If you plan to start a venture of your own or know any women who may need the assistance, go ahead and let them know of this option offered by almost any bank in the country.

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