Loan Against FD - Bank of Baroda (BOB)

One of the safest investment options provided by banks and other financial institutions is a fixed deposit. The third-largest and most reputable government bank in the nation, Bank of Baroda has been providing FD and other banking services for decades. The fixed deposit account holders can avail of a Loan Against FD in Bank of Baroda.

What is the Loan Against FD Bank of Baroda?

Customers of Bank of Baroda have the option of borrowing money against their fixed deposit accounts. It enables customers to meet their financial obligations without having to liquidate their fixed deposit accounts by giving funds up to 95% of the amount of their fixed deposit. These loans are provided in the form of overdrafts or demand loans secured by deposits.

Many people frequently experience financial hardships that need taking out a loan in order to get by. Even if there are many sources from which you can obtain a loan, borrowing money against a fixed deposit is one of the simplest possibilities.

Due to their safety and security, fixed deposits (FDs) are still favoured by many people in India and are among the most widely used financial instruments. The availability of taking out a loan against your FD only increases the investment's appeal. Instead of losing your investment in an emergency, you can just choose to take out a loan. Banks offer this as an alternative to prematurely releasing the money to the investor.

But keep in mind that a loan against an FD is not the same as a bank's overdraft capacity. Overdrafts occur when a consumer requests to take more money from their account than what is authorized by the bank, up to a predetermined limit.

The overdraft credit limit fluctuates as well, depending on the customer's profile and credit score, among other factors. The interest charged on overdrafts is typically higher than the interest charged on loans.

Also, check - Bank of Baroda FD interest rates 2023

Characteristics of Loan Against FD Bank of Baroda

The characteristics of the Bank of Baroda loan against FD, or loan against fixed deposit, are as follows:

• Demand loans and overdrafts against term deposits are the two loan options.
• It is possible to borrow up to 95% of the FD account's current balance.
• A loan against an FD must be taken for a minimum of Rs. 25,000.
• Interest is assessed based on the most recent policies of the bank.

Benefits of the Bank of Baroda Loan Against Fixed Deposit

• No need to withdraw from a fixed deposit
• Decreased interest rates
• Svailable on all fixed deposit types (domestic and NRI FDs)
• Very little documentation
• Zero processing charges

Eligibility for the Bank of Baroda Loan Against FD Interest Rate

If a potential borrower satisfies the following eligibility standards, the Bank of Baroda loan application process could be completed in as little as one day.

• The candidate must be an Indian national.
• The candidate must be in possession of a legitimate Bank of Baroda Fixed Deposit account.

Required Documents

The following paperwork must be provided in order to submit a successful application:

• Fixed deposit receipts for your Bank of Baroda account
• application for a loan, properly completed and attested
• The properly executed loan contract

Things to Remember Before Opting for a Loan Against an FD

These are the factors that need to be considered before anyone can opt for a loan against their Fixed deposit from the Bank of Baroda:

1. There is no distinct duration for the loan against FD. The maximum loan period available is the term of the fixed deposit itself. Like mortgage loans, the payment process is straightforward. The borrower pays the EMIs on schedule or in accordance with the lender's instructions.
2. The bank typically provides flexible repayment schedules for loans secured by fixed deposits. The only restriction is that the loan term cannot exceed the length of the fixed deposit held with the bank. The loan can be repaid in one big sum or through monthly installments.
3. In the event of a loan against fixed deposit foreclosure, BOB typically does not impose any penalties or additional fees.
4. In contrast to home and personal loans, the bank does not impose any processing costs for loans secured by FDs. 
5. Banks typically charge between 2 and 2.5 percent more in interest for a loan of fixed deposits than what they pay on the deposits themselves. 
6. The maximum amount that can be taken as a loan against an FD from the Bank of Baroda is 95% of the balance that is available in the fixed deposit account you hold in the Bank of Baroda. You can also avail yourself of less than 95% of how much you hold in your FD, but the bank will not offer you anything more than that percentage.

FAQs

Q1. I invested in a BoB FD; can I borrow against it?

With a BoB FD investment, you can get a loan for up to 95% of the value of the maturity of your FD.

Q2. Exist any BoB FD investment Tax Exemption Schemes?

Customers who invest in Baroda Tax Saving Term Deposits receive tax advantages under Section 80 C of the Income Tax Act.

Q3. What is the amount I can take as a loan against my FD from BOB?

The maximum amount that you can take as a loan against your fixed deposit is 95% of the value in your FD account. Let's look at an example of how this works. For instance, when you have an FD of Rs. 10 lakh in the Bank of Baroda, you can avail of a loan against it of at least Rs. 9,50,000

Q4. Do I have to get approved in order to get a loan Against my FD in Bank of Baroda?

No. It is easier and much simpler to get a loan against your FD from the Bank of Baroda.

Q5. What is the maximum tenure that the bank will offer me in order to repay the loan that I had taken against an FD from Bank of Baroda?

The maximum tenure to repay a loan that was taken out against an FD is 3 years.