Home Financial & Banking Terms Loan against Recurring Deposit

Loan against Recurring Deposit

Loan against Recurring Deposit

Loan against recurring deposit is a very popular product and provides a number of benefits both to the lender as well as the borrower.

Recurring deposit is a scheme by which one can save a fixed amount of money every month and helps in inculcating savings habit among all. The amount and tenure is fixed during availing the product and the rate of interest is locked meaning that irrespective of the changes in interest rate during the tenure of the deposit, the interest rate will remain the same

Loan against Recurring Deposit – Benefits for the borrower

  • The borrower need not prematurely close the deposit account before maturity
  • The loan amount can be as high as 90% of the amount thus deposited
  • The rate of interest of loan is very low, generally 1% more than the interest he is earning on RD. If the bank is paying him 9% on the deposit, he may be asked to pay only 10% on the loan amount
  • There is flexibility in repayment
  • Negligible paperwork involved

Loan against Recurring Deposit – Benefits for the lender

  • The loan is fully secured
  • The lender need not part with the deposit amount
  • The product helps to generate more business for the Bank.
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Sreya Ray is working as a Manager at State Bank of India. She is a voracious reader and a passionate writer. Her life is complete with her daughter and the support of her husband and the inspiration of her parents. Sreya loves multi-tasking and is a dreamer. If she don't create anything on a day,She feels that she had wasted my day.


  1. Besides being ultimately secured, these loans against recurring deposits also help in benefiting both parties of a transaction.Both are benefited Whether it is borrower who has the loan amount as high as ninety per cent of the deposits, or it is the lender who gets safety to the greatest level.

  2. Obtaining a loan that is fully secured is one of the best deals that an investor can grab from a bank. When it is against a recurring deposit, then the lender need not part with the deposit amount either? Seems like a better deal for loans! No doubt this is the best post. Thanks author for choosing this write.

  3. This is a win win situation for both the bank and the client. The bank has nothing to loose while business is being done. The customer on the other hand is saving money while earning the benefit of a much larger sum. This is no doubt one of the best types of loans to be taken.


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