Is a loan against an FD better than a personal loan?

It depends. A loan against an FD usually has lower interest rates compared to personal loans. If you want better chances of loan approval, lower rates, and more flexible terms and conditions, opt for a loan against an FD. However, it locks your savings. If you want to keep your fixed deposit accessible, choosing a personal loan could be a better option than breaking your FD.

What is the processing time for an online FD loan?

On My Mudra, the processing time for an online FD loan is quick. You may also get instant approval.

Can I close my FD if I have an active loan against it?

No. You must repay the loan (overdraft) in full before you can close or withdraw the fixed deposit.

How does the FD overdraft process work?

An overdraft limit (the total amount you can borrow) is sanctioned against your FD. You can use the entire amount or a portion as you require and repay it anytime before maturity.

Do I need a high credit score to apply for a loan against an FD?

You don’t necessarily need a high credit score to apply for a loan against an FD, as the pledging provides a safety net for the lender.

How to Apply for a Loan Against FD Online

You may need urgent cash, but breaking your fixed deposit (FD) feels like a defeat. You spent months or years building that savings cushion, and withdrawing it prematurely often means paying a penalty and losing out on interest earnings.

It feels like a step backwards, doesn't it?

But there is a smarter way to unlock that cash without destroying your investment - apply loan against FD. You can unlock funds against your fixed deposit without breaking it by applying for a loan against your FD, with loans available for up to 90% of your deposit amount while your original FD continues to earn interest.

If you are new to this, don't worry. It’s simple to get a loan against your FD entirely online. The loan against fixed deposit process is digital, fast, and involves minimal paperwork. Here is your actionable guide to navigating this process from home.

Pre-Application Checklist: What Documents and Details You Need Before You Start

Having these documents ready will ensure the application process takes minutes, not hours.

Basic KYC Documents:
- Identity proof, like PAN, Aadhaar, passport, voter ID
- Address proof, like utility bills, Aadhaar, voter ID, or passport
Active Net Banking Account: For online application, you must have internet banking enabled for the bank where your FD is held.
Linked Mobile Number: For receiving the One-Time Password (OTP).
FD Receipt/Number: To know exactly which FD you want to pledge.
No Existing Lien: To ensure the FD is not already pledged for another credit card or loan.

Step-by-Step: How to Apply Loan Against FD Online

When it comes to FD loan apply online, My Mudra has an easy, quick, and convenient procedure.

Step 1: Check Your Eligibility

Visit My Mudra, go to the Loan Against FD page, and enter the required details of the FD to check the basic requirements.

Step 2: Select the FD to Pledge

The system will show you the eligibility.

Select the specific FD you want to use as collateral.
The screen will instantly display the maximum eligible limit (usually 75% to 90% of the FD value).

Step 3: Review and Compare

Review the loan amount, tenure, interest rate, and other details. Compare all the options, and then select. The goal is to aim for low interest rates and favourable terms. That said, do not forget to consider associated charges and fees, like processing fees and pre-closure fees, as they can add to the overall borrowing cost.

Tip: When you apply loan against FD, borrow only what you need to keep interest costs low.

Step 4: Submit Application

Once you have decided on the loan amount and other details, carefully fill out the online application form. Cross-check all the information, and submit.

Step 5: Upload Documents

You will see a list of required loan against FD documents. Upload them to complete the application process.

Step 6: Approve Digital Pledge

Approve the pledging of your FD digitally. The loan application is submitted while your FD continues to earn interest.

Step 7: Loan Approval & Disbursal

Wait for the approval. With My Mudra, the approval is quick, and funds are directly credited into your account.

A Quick Look at How Banks Process Loan Against FD Applications

As you apply loan against FD, the bank starts verifying the FD details you provided. It then evaluates the eligibility status and decides on the loan amount to offer based on the FD value.

If everything verifies, the bank then provides approval and prepares for the loan agreement.

Troubleshooting: Common Hiccups and Fixes

Even with a smooth process, things can go south. Here are some common errors and ways to fix them when you apply loan against FD:

Issue	Likely Cause	Quick Fix
No Eligible FDs Found	Your FD might be a 5-year Tax Saver FD or in the name of a minor.	You cannot borrow against Tax Saver FDs. Try a standard FD.
No FD Found	The system may show no FDs.	The FD number or other details entered may be incorrect. Re-enter.
Joint Account Error	The FD is held jointly.	Most banks require physical signatures from all holders.
Loan Amount Not Eligible	The LTV limit may be reached, or the FD is too close to maturity.	Adjust the loan amount or try a different tenure.
FD Already Pledged/Linked to a Lien	The FD may already be pledged for some other loan or line of credit. It may be blocked due to a previous lien.	Check the status of your FD. Use another FD/resolve the lien.

What If You Don't Have an FD? (Or Don't Want to Freeze It?)

Sometimes, you might not have a large enough FD to cover your emergency. Or perhaps, you don’t want to lock your savings because you might need to liquidate the whole thing soon.

This is where My Mudra becomes your strongest ally.

You can apply for a loan against other securities you may have. In addition to secured loans, there are also options that do not require any collateral pledging. You also don’t always need collateral to get a great interest rate. If you need funds urgently but want to keep your savings free, a personal loan via My Mudra is an alternative to consider.

Why Choose My Mudra?

No Collateral Needed: Unlike a loan against fixed deposit process, you don’t need to pledge any assets for certain loans.
Wide Network: We match you with 90+ Banks and NBFCs to find the lowest rate for your profile.
Quick Procedures: Get disbursals in as little as 24 hours.

Also Read:
- Loan Against FD Interest Rates 2025-2026 – Bank-Wise Comparison
- Loan Against FD vs Personal Loan – Which Is Better? (2025 Comparison)

"Check Your Loan Eligibility in Minutes!"

How to Apply for a Loan Against FD Online – Step-by-Step Guide