Can Fixed Deposit Be Kept as Collateral for a Loan?

Posted on Monday, August 31st, 2026 | By IndusInd Bank

Summary

• You can easily use a fixed deposit as a collateral to secure a loan.
• The loan amount you can get against your FD is usually dependent on your FD’s value, bank’s terms and conditions and loan type.
• Anyone with an existing FD can use it as a collateral to obtain a loan.
• Loans against FD generally have lower interest rates than personal loans.

When it comes to securing a loan, collateral plays a crucial role in determining the terms and conditions of the borrowing. Many individuals wonder if a fixed deposit (FD) can be utilised as collateral to obtain a loan. In this blog, we will explore the concept of using an FD as collateral and shed light on the benefits of opening an IndusInd Bank Online Savings Account and booking an FD for this purpose. 

What is FD Collateral? 

FD collateral basically means using your fixed deposit as a security to get a secured loan from a bank or financial institution. It benefits both the lender and borrower. How? A FD collateral enables you to secure a loan whilst continuing to earn interest on the fixed deposit. But in case you default on your loan, the bank can use the FD to recover the loan amount.

What is Loan Against FD?

Loan against fixed deposit is a type of secured loan offered by banks and financial institutions against the value of an existing fixed deposit. It is considered as one of the low-risk loan types as the FD serves as collateral, reducing the bank’s risk and making the borrowing process simpler and more affordable. In the event of default, the lender has the right to claim and sell the collateral to recover the outstanding loan amount.

Also Read: Taking a Loan Against FD? Here’s What You Should Know

Is It Possible to Use FD as Collateral? 

Yes, it is indeed possible to use a fixed deposit as collateral for a loan. A fixed deposit acts as a secure financial instrument that holds your savings while generating interest. By pledging your fixed deposit as collateral, you provide assurance to the lender and increase your chances of loan approval. The amount you can borrow against your FD typically depends on the bank’s policies, the FD’s value, and the type of loan you are seeking. 

FD as a Collateral: Eligibility and Process

Using FD as a collateral for a loan is a straightforward process if you know your bank’s eligibility and application process. Have a look:

Eligibility Criteria:

• Have an active FD with the lending bank.
• Be the owner of the fixed deposit.
• Meet the minimum FD value specified by the bank.
• Submit valid identity and address proof, if required.

Application Process:

1. Apply for the loan against FD via the bank’s website, mobile application or branch.
2. Select the FD you want to use as a collateral. The bank typically offers a loan amount that’s equivalent to 70-90% of your FD value.
3. Submit your documents like fixed deposit receipts and identity proofs.
4. Upon successful verification, the bank disburses the eligible loan amount to your account.

Also Read: 5 Benefits of Loan Against Fixed Deposit that You Should Know

Benefits of Opening a Savings Account and Booking an FD

1. Competitive Interest Rates: IndusInd Bank offers attractive interest rates on their online savings account and fixed deposit products. By opening an account and booking an FD, you can enjoy higher returns on your savings while keeping your funds readily available for use as collateral. 

2. Easy Online Account Opening: IndusInd Bank provides a convenient and user-friendly online account opening process. You can open an online savings account from the comfort of your home or office, without the need to visit a branch. This saves you time and effort, making the account opening experience hassle-free. 

3. Flexible Tenure Options: IndusInd Bank offers flexible tenure options for fixed deposits, allowing you to choose a duration that aligns with your financial goals. Whether you need a short-term or long-term FD, you can customise the tenure to suit your needs. The longer the tenure, the higher the FD interest rate you can earn on your FD. 

4. Loan Against FD Facility: IndusInd Bank provides the option to avail of a loan against your fixed deposit. By using your FD as collateral, you can access funds when needed without breaking the deposit or losing out on the accrued interest. This facility offers convenience and flexibility, enabling you to meet your financial requirements without disrupting your savings plan. 

5. Competitive Loan Terms: With IndusInd Bank, you can benefit from competitive loan terms when using your fixed deposit as collateral. The interest rates are often lower compared to unsecured loans, and the collateral provides assurance to the lender, potentially leading to quicker loan approvals and favorable repayment terms. 

Conclusion 

Utilising a fixed deposit as collateral for a loan offers a secure and convenient way to access funds while earning interest on your savings. By opening an IndusInd Bank Savings Account and booking an FD, you not only benefit from competitive interest rates and flexible tenure options but also gain the advantage of a loan against your FD when required. 

IndusInd Bank’s commitment to providing superior banking services, enhanced security, and dedicated customer support makes them a reliable partner for your financial journey. Take advantage of their online account opening process, book an FD, and experience the convenience of managing your funds and accessing loans seamlessly. 

Additionally, IndusInd Bank offers a range of additional benefits and features with their Savings Account. These include: 

1. 24/7 Account Access: With online banking services, you can access your account anytime, anywhere, and perform various banking transactions at your convenience. Monitor your account balance, track your FD maturity, and stay updated on your financial activities. 

2. Enhanced Security: IndusInd Bank prioritises the security of your funds and personal information. They employ robust security measures and advanced encryption technologies to ensure the safety of your online transactions and data. 

3. Dedicated Customer Support: IndusInd Bank values their customers and provides excellent customer support. If you have any queries or need assistance with your Online Savings Account or FD, their dedicated customer support team is just a call or message away. 

4. Additional Banking Services: In addition to the benefits mentioned above, IndusInd Bank offers a wide range of banking services to cater to your diverse financial needs. From credit cards and personal loans to investment options and insurance products, they provide a comprehensive suite of financial solutions. 

FAQs

Can a minor’s Fixed Deposit be pledged as collateral for a loan?

Normally, you cannot pledge a minor’s fixed deposit for a loan.  However, some banks may allow a loan against a minor’s FD if it is operated by a parent or legal guardian, subject to bank’s terms and applicable regulations. It is advisable to check with your bank’s relationship manager for detailed information.

Can an overdraft facility be availed against a pledged Fixed Deposit?

Yes, you can avail an overdraft facility against a pledged fixed deposit.

Are digital fixed deposits eligible to be used as collateral?

Yes, you can use your digital fixed deposits as a collateral for a loan.