Check your eligibility
What These Loans Fund
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A limit of typically 85 to 95 per...
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Overdraft structure with interest...
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Any lawful end use
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Continued interest accrual on the...
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Tenure aligned to the deposit matu...
Who Can Consider This Loan?
- Ownership of the assets being pledged, in your own name
- Assets on the lender's approved list of pledgeable securities
- Minimum holding value set by the lender
- KYC completed with the lender
- For insurance policies, a policy that has acquired surrender value
What May Not Be Funded?
- Deposits in a minor's name, at most banks
- Tax-saving five-year deposits, which cannot be pledged
- Amounts above the funding percentage
- Premature closure of the deposit while the loan is outstanding
- Deposits held with a different institution from the lender
Always check the sanction letter before you commit.
Why Choose Wealth & Covers?
- Expert advice to choose the right plan
- Plans from leading loans companies
- Hassle-free process and documentation
- End-to-end support, including claim assistance
- Dedicated relationship manager
- Expert Guidance Personalised advice from experienced loans professionals.
- End-to-End Support From choosing the right plan to claim assistance, we are with you always.
- Claims Assistance Hassle-free claim support to ensure you get what you deserve.
- Transparent Process Clear information, easy documentation and a hassle-free experience.
Overview
A loan against a fixed deposit is priced at a small spread over the deposit rate — commonly one to two percentage points. If your deposit earns seven per cent, the loan costs eight or nine. That makes it the cheapest borrowing most individuals can access.
The deposit continues earning throughout, so the real cost is only the spread. Breaking the deposit instead means losing the accrued interest, paying a premature withdrawal penalty, and forfeiting a rate you may not be able to get again.
It is also the fastest borrowing available. The bank already holds the security, knows your KYC, and can sanction against its own deposit within hours. For a genuine emergency, this is usually the quickest legitimate source of funds available.
Who should consider it
Anyone holding a fixed deposit who needs money temporarily. Anyone considering breaking a deposit early. Anyone facing an emergency who needs funds the same day. Senior citizens, whose deposits often carry rates worth protecting.
Benefits
- The lowest rate available on any retail borrowing
- The deposit continues earning interest throughout
- Avoids premature withdrawal penalties and lost interest
- Sanctioned within hours, often the same day
- Usually an overdraft, so interest is on the drawn amount only
- No credit score assessment — the deposit is the security
What the loan funds, and what it does not
Read the right-hand column first. It is the one that decides how much you have to arrange yourself.
Usually funded
- A limit of typically 85 to 95 per cent of the deposit value
- Overdraft structure with interest on the amount drawn
- Any lawful end use
- Continued interest accrual on the deposit
- Tenure aligned to the deposit maturity
Usually not funded
- Deposits in a minor's name, at most banks
- Tax-saving five-year deposits, which cannot be pledged
- Amounts above the funding percentage
- Premature closure of the deposit while the loan is outstanding
- Deposits held with a different institution from the lender
Funding limits and the treatment of add-ons vary between lenders and move with the borrower profile. The sanction letter you receive is what governs — we will walk you through it before you sign.
How it works with us
- 1 We look at what you already hold Mutual funds, deposits, shares, bonds and policies. Most people needing a personal loan are holding something cheaper to borrow against.
- 2 Eligible value calculated after haircut Lenders lend a percentage of market value, and the percentage varies sharply by asset. That number decides what you can raise.
- 3 Lien or pledge marked The asset stays yours and keeps earning. A lien is recorded so it cannot be sold while the loan runs.
- 4 Limit sanctioned, usually as an overdraft You draw what you need and pay interest only on that. For an uncertain need this is far cheaper than a term loan.
- 5 Margin monitored while the loan runs For market-linked assets we flag it if a fall approaches a margin call, so you are not surprised by one.
Important considerations
The things a brochure tends to leave out. Read these before you decide.
- Never break a deposit for a short-term need without checking this first. The penalty plus lost interest almost always exceeds the spread on a loan against it.
- Tax-saving five-year deposits cannot be pledged. That is a statutory restriction, not a bank policy.
- Take the overdraft rather than a term loan. Interest on what you draw for the days you draw it is materially cheaper for a short need.
- The loan tenure cannot exceed the deposit maturity. On a deposit maturing in eight months, that caps your repayment period.
- This works best at your own bank. Deposits held elsewhere generally cannot be pledged to a different lender.
Documents required
- Identity proof — Aadhaar, PAN or passport
- Address proof
- Statement of holdings for the assets being pledged
- Demat account details, for shares and bonds
- Policy documents, for loans against insurance
- Fixed deposit receipts, where applicable
- Bank account details for disbursal
Frequently Asked Questions
Is it cheaper than breaking the deposit?
Almost always. Breaking a deposit costs you the accrued interest plus a premature withdrawal penalty, and you lose a rate you may not be able to get again. A loan against it costs only the small spread over the deposit rate while the deposit keeps earning.
How much can I borrow?
Typically eighty-five to ninety-five per cent of the deposit value. The margin retained is what protects the bank if you do not repay, and because the security is its own deposit the haircut is small.
Do they check my credit score?
Generally not. The bank holds the security and can set off the deposit against the loan if necessary, which makes credit assessment largely irrelevant. That is also why it is available to borrowers who might struggle elsewhere.
Can I pledge a tax-saving deposit?
No. Five-year tax-saving deposits cannot be pledged or used as security — that is a statutory restriction attached to the tax benefit rather than a bank policy.
How quickly can I get the money?
Usually the same day at your own bank, sometimes within an hour. The bank already holds the security and your KYC, so there is very little to process. For a genuine emergency this is normally the fastest legitimate funding available.
Want a shortlist instead of a catalogue?
Tell us the situation and an advisor comes back with two or three options that actually fit — and names what each one gives up.