Need Cash? Here’s How Overdraft (OD) Against FD Can Help You
July 03, 2025

An overdraft (OD) against a Fixed Deposit (FD) is one of the fastest and most cost-effective ways to borrow money from a bank without prematurely breaking the FD. In this arrangement, your Fixed Deposit serves as collateral for the OD facility. With Ujjivan Small Finance Bank, you can get an OD limit of up to 80% of your FD's value, with interest typically capped at 2% above the FD's contracted interest rate. Another significant benefit is that interest is charged only on the amount actually utilised, rather than the total sanctioned amount, making it a flexible and economical borrowing option.
Understanding OD Against Fixed Deposit
An overdraft against FD is a secured loan that allows you to borrow funds from your bank using your Fixed Deposit as collateral. This facility enables you to meet financial emergencies or fund personal or business needs without having to liquidate your FD prematurely. Since the loan is secured, banks offer competitive interest rates, making it an attractive alternative to personal loans or credit cards.
Key Features and Benefits of Overdraft Against FD
- High Loan-to-Value Ratio: Banks generally allow an OD limit of up to 80% of the FD value, ensuring you can access a substantial amount of funds.
- Lower Interest Rates: The interest rate on an OD is usually just 2% above the FD interest rate, making it a cost-effective borrowing option.
- Flexible Usage: You only pay interest on the amount you withdraw and use, not on the total sanctioned amount.
- No Processing Fees: Banks like Ujjivan waive processing fees for OD facilities linked to FDs, saving you additional costs.
- Preserves FD Benefits: Your FD continues to earn interest, even while it serves as collateral.
- No EMI Obligation: There is no fixed repayment schedule. You can repay the borrowed amount as per your convenience, provided the OD limit is not exceeded.
Eligibility and Important Points to Remember to Avail Overdraft Against FD
- The facility is available only to existing bank customers with Fixed Deposits
- An overdraft against FD facility for traditional or Cumulative retail FDs may be availed only if the FD is a minimum of 6 months in tenure
- The Sanction amount shall be valued at ₹25,000 or more. Auto-renewal instruction for the FD is necessary for eligibility.
- The FD held by the customer must be for a period of 6 months at least from the date of opting for the advance against it.
- For short-term FDs, the OD's duration is set for a year and must not surpass the tenure of the FD. However, it can be accepted if TD is in Auto renewal mode.
- For multiple deposits, the OD's duration cannot exceed the term of the earliest maturing FD.
- The interest is debited on the first day of the month for utilised amount for both existing and new customers.
Documents Required for Overdraft Against Fixed Deposit
- Overdraft against Fixed Deposit Application Form
- DPN (Demand Promissory Note)-Obtain Delivery Letter for DPN. This is part of revised AOF
- DPN
- Lien Letter (part of AOF)
How OD Against FD Fares Against Other Loan Options
- No Credit Score Requirement: Since the FD is collateral, a credit score check is often not required.
- Faster Processing: Banks process OD against FD requests quickly, sometimes within hours.
- No Asset Evaluation: Unlike other secured loans, there is no need for asset valuation.
- Cost-Effective: Lower interest rates make it a cheaper alternative to personal loans or credit cards.
Final Thoughts
An overdraft against FD is a convenient and affordable financial solution for those in need of quick liquidity without disrupting their savings. With its flexible repayment terms and cost-effectiveness, it stands out as a smart alternative to other borrowing options. However, it is essential to use this facility judiciously and ensure timely repayments to avoid penalties.
Looking to grow your savings faster? Ujjivan SFB offers a wide range of fixed deposit products. Select the FD of your choice and take a step forward to your financial goals. Alternatively, you can browse through Ujjivan SFB product suite - our wide range of financial products are designed to make your financial life better.
Disclaimer:
The contents herein are only for informational purposes and generic in nature. The content does not amount to an offer, invitation or solicitation of any kind to buy or sell, and are not intended to create any legal rights or obligations. This information is subject to updation, completion, amendment and verification without notice. The contents herein are also subject to other product-specific terms and conditions, as well as any applicable third-party terms and conditions, for which Ujjivan Small Finance Bank assumes no responsibility or liability.
Nothing contained herein is intended to constitute financial, investment, legal, tax, or any other professional advice or opinion. Please obtain professional advice before making investment or any other decisions. Any investment decisions that may be made by the you shall be at your own sole discretion, independent analysis and evaluation of the risks involved. The use of any information set out in this document is entirely at the user’s own risk. Ujjivan Small Finance Bank Limited makes no representation or warranty, express or implied, as to the accuracy and completeness for any information herein. The Bank disclaims any and all liability for any loss or damage (direct, indirect, consequential, or otherwise) incurred by you due to use of or due to investment, product application decisions made by you on the basis of the contents herein. While the information is prepared in good faith from sources deemed reliable (including public sources), the Bank disclaims any liability with respect to accuracy of information or any error or omission or any loss or damage incurred by anyone in reliance on the contents herein, in any manner whatsoever.
To know more about Ujjivan Small Finance Bank Products Visit:"https://www.ujjivansfb.in"
All intellectual property rights, including copyrights, trademarks, and other proprietary rights, pertaining to the content and materials displayed herein, belong
to Ujjivan Small Finance Bank Limited or its licensors. Unauthorised use or misuse of any intellectual property, or other content displayed herein is strictly prohibited and the same is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person’s nationality, residence or otherwise) be contrary to law or registration or would subject Ujjivan Small Finance Bank Limited or its affiliates to any licensing or registration requirements.
FAQs
1. What is the maximum overdraft limit I can avail against my FD?
Most banks offer an overdraft limit of up to 80% of the FD value. However, this may vary by bank policies.
2. Will my FD continue to earn interest if it is used as collateral?
Yes, your FD will continue to earn the contracted interest, even while it is pledged for the overdraft facility.
3. Is there a minimum tenure required on the FD to avail an overdraft?
Yes, some banks may require the FD to have a minimum remaining tenure to qualify for an OD.
4. Can I prepay the overdraft amount?
Yes, you can prepay the borrowed amount anytime without incurring prepayment charges in most cases.
5. How is the interest calculated on the overdraft facility?
Interest is calculated on the amount utilized on a daily basis and is debited monthly.
6. Are there any hidden charges in an overdraft against FD?
Most banks are transparent, but it’s advisable to confirm details about penalties during application.
7. What happens if I fail to repay the overdraft?
If you default, the bank may liquidate your FD to recover the outstanding amount.
8. Can I avail of an overdraft against a joint FD?
Yes, but all account holders must sign the overdraft agreement.
9. Is it possible to renew the overdraft facility if the FD is renewed?
Yes, the overdraft facility can usually be renewed along with the FD, subject to bank terms.
Latest Blogs

How Jewellers in India Calculate Gold Price
June 26, 2025
Gold jewellery holds a special place in Indian culture, often bought during festivals and family celebrations.

How to Link Your Mobile Number with Aadhaar Online & Offline Methods)
June 25, 2025
Linking your mobile number with Aadhaar is essential if you want to access Aadhaar-based services like e-KYC and Video KYC for bank accounts, OTP verification, filing taxes, e-Aadhaar downloads, and biometric authentication. Without a registered mobile number, you can't use any online Aadhaar services.

The Importance of Property Insurance When Taking a Home Loan
June 25, 2025
A home loan is a long-term financial commitment often spanning between 10 to 20 years, or even more.

Fixed Deposits vs Sovereign Gold Bonds (SGB): Which Is the Better Investment?
June 24, 2025
In today’s uncertain economic climate, conservative and low-risk investment options continue to dominate the choices of Indian savers.

FD vs SIP: Not a Race, But a Financial Match
June 24, 2025
We often treat money like a race — chasing returns, tracking trends, comparing who’s earning more from what.
Quick Links
Registered with DICGC

