Loan against term deposits

Some Important Guidelines on Extending Loan Against Term Deposits

Loans and Advances may be granted against deposits lying to the credit of the borrowers and/or third parties.

It can be extended at any branch of the bank, after getting the lien noted and verification of signature.

The margin for advance granted against Rupee Term Deposit included NRE deposits is as under:

Advance Granted Against Rupee Term Deposit Standing in the Name of the Borrower including NRE Deposits

Maturity period remaining at the time of granting advances Margin %
Advance against Term Deposit standing in the name of the borrower
Upto 2 years 5.00%
Above 2 years and upto 3 years 7.50%
Above 3 years and upto 4 years 10.00%
Above 4 years and upto 5 years 12.00%
Above 5 years 20.00% (Minimum)
Advance against third party deposits 25.00% (Minimum)
Members of Staff/ honourably retired/ Voluntarily retired/ widow of Staff:
Advance upto Rs. 3 Lacs 5.0%
Advances Above 3 Lacs As applicable to Public

Advance Against Non-Resident Deposits (FCNR/NRO)

Maturity period remaining at the time of granting advances Margin %
Advance against FCNR(B) Deposit to the Depositor
Upto 1 year 10.0%
Above 1 year but upto 2 years 20.00%
Above 2 years 30.0%
Advance against third party deposits
Upto 2 years 20.0%
Above 2 years 30.0%
NRO Term Deposits 25.0%

If there is any erosion in the minimum margin after granting such loan/ advances, bank has the discretion to call upon the borrowers to bring in the funds to make good the shortfall in the minimum margin or to liquidate the outstanding balance of loan/advance by closing the term deposit prematurely after serving proper notice to the borrower.

While granting advance against term deposits where TDS is applicable, the total tax deductible u/s 194A of Income Tax on interest of such term deposits is also to be reduced from the amount of advance/DP/limit.

Rate of Interest

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