New Delhi, Oct. 19 -- A loan against a fixed deposit (FD) can help depositors meet urgent or unforeseen expenses, such as surgeries or accidents, without breaking the deposit prematurely. The bank or financial institution lends a sum against the FD as collateral.

The loan is disbursed under the lender's terms and conditions, and the loan agreement spells out the collateral and the consequences of missed payments or default. The deposit may continue to earn interest, subject to its terms, but the borrower must still repay the loan along with applicable interest and charges.

If the depositor delays or fails to repay, the pledged deposit is at risk. The lender can use the FD proceeds to recover its dues, subject to the loan agreement.

If ...