In case of an emergency, instead of breaking a fixed deposit (FD), you can get a loan against it. Banks usually lend up to 90 per cent of the value of your FD. The limit varies from one bank to another. Loan against FD is given by banks as an overdraft facility.
The rate on such loans is 1 and 2 percentage points above the FD rate. The tenure is up to five years. If you fail to service the loan, the bank can foreclose your FD to recover its money. This loan is not available on five-year tax saving FD.
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