Loan against Fixed Deposits in SBI (State Bank of India)
Fixed Deposits, popularly known as FDs, is a financial instrument in which the deposit gives a certain sum of money to either the bank or a financial institution wherein the later pay a specified rate of interest on the amount for and returns the money in lump sum after a fixed period of time. The rate of interest for various banks varies from each other. In this article, we would cover all the aspects pertaining to loan against fixed deposits in State Bank of India.
Features of Fixed Deposit Account
- One of the core features of a fixed deposit is that an individual who has extra funds can enjoy a decent rate of interest if it lends to the bank or the financial institution
- The amount, in case of FDs can be deposited to the bank just once and its not recurring. If the depositor wishes to deposit further funds in his/her name, he/she would have to open a fresh FD account.
- At the time of opening an FD account, the bank gives a deposit receipt or certificate to the depositor, which they can furnish at the time of maturity of the amount and get the grown money back with principal.
- As per the Income Tax Act, 1961, tax is charged on the interest earned in case of a fixed deposit.
What is the duration of fixed deposits in SBI?
If you are investing your money in State Bank of India, the duration of your fixed deposits may vary anywhere from seven years to ten years, depending upon the scheme you are opting for.
Who is eligible to open a fixed deposit account in SBI?
Any Indian national including minors and Hindu Undivided Family can open a fixed deposit account in their name.
Can you opt for loan against fixed deposits in SBI?
Yes, off course, you can avail a loan against your fixed deposit in SBI. This loan would be for a short term interval. This loan would be provided as an overdraft against the fixed deposit amount. This is done because the facility should give the depositor an overdraft facility instead of prematurely breaking the deposit amount.
How much loan can you avail against your fixed deposit?
The amount of loan against your fixed deposit may vary from 70 per cent to 90 per cent of the deposited amount. In certain cases, the loan amount may be beyond 90 per cent too, depending upon case to case. For your specific case, you can always check with your SBI branch.
The benefits of loan against fixed deposits in SBI
If you are opting for a loan against your fixed deposits in SBI, you have a lot of advantages as compared to getting a personal loan altogether. For example, you deposited a certain amount in FD in SBI in recent past and there is an urgent requirement of money for you. In this situation, instead of opting for a personal loan altogether, which would charge your more than 13 per cent of rate of interest, you can chose to get a loan against your FD at a much lower rate of interest.
Last but not the least, the rate of interest you would be paying on your loan amount would be somewhere around 2 to 2.5 per cent above the rate on which the bank is paying you on your fixed deposits. This certainly is a better option than taking a fresh loan altogether in the times of urgent needs of money. For more details on this facility from SBI, you can always get in touch with your branch official for specific information.