Overdraft Against NRI Fixed Deposits: Interest Rates & Key Benefits Explained

As an NRI, you may occasionally need quick access to funds—be it for a family emergency, a business opportunity, or educational expenses. Instead of breaking your fixed deposit (FD) and losing out on interest earnings, you can opt for an overdraft against your NRI fixed deposit. This facility allows you to borrow against your savings while your deposit continues to grow.

Overdrafts against NRI FDs are a smart way to unlock liquidity without disturbing your long-term plans. They offer quick processing and flexibility, making them a preferred option for many NRIs looking to manage cash flow efficiently.

Here's what this article covers:

• Key features of OD against FD
• Type of deposits can you leverage
• How to apply for an OD against FD

Key Features of Overdrafts against Fixed Deposits

• Overdrafts can only be issued against FDs that are worth ₹50,000 or more.
• While customers can typically get an Overdraft of up to 85% of their FD, the actual limit is decided by the bank.
• Overdrafts cannot be issued against the following Fixed Deposits:
  • Tax Saving FDs
  • FDs held by minors
  • FDs with tenures of less than 181 days
  • FDs for which premature withdrawal is not allowed
• The interest rate for Overdrafts against Fixed Deposits usually varies between 2-4% over the fixed deposit interest rates. Contact your bank to know more.
• Interest will only be charged on the utilized amount.
• The Overdraft is initially issued for a period of 1 year and is renewable.
• The FD against which an Overdraft has been issued will continue to earn interest.

Types of NRI Fixed Deposits You Can Leverage

You can use your NRE, NRO, or FCNR fixed deposits as collateral to avail an overdraft facility, giving you access to funds without disturbing your savings.

Please note: Overdrafts can only be availed on Fixed Deposits of ₹50,000 or more (equivalent FCY amount for FCNR deposits).

Here’s a snapshot of the different types of NRI fixed deposits and their key features:

Things to Remember Before You Avail the Overdraft

While the Overdraft facility offers convenience and low rates, there are a few pointers to keep in mind:

• The overdraft will be issued in the name of the FD holder. It may also be extended in favor of a third party.
• Overdraft proceeds cannot be repatriated abroad.
• Not allowed for re-lending, real estate investment, or agricultural purposes.
• NRE/FCNR deposits cannot be withdrawn before maturity, if pledged towards an Overdraft.
• Interest is charged monthly on the utilized overdraft amount.

Ensure the Overdraft purpose aligns with the bank’s permissible usage policies.

Final Word

You are now well aware of the numerous benefits that come with Overdrafts against NRI fixed deposits. This facility gives you liquidity without compromising your long-term savings, with:

• Funding personal needs
• Managing a cash crunch
• Seizing a new opportunity

Kotak Mahindra Bank has attractive FD rates, a simple application process, and flexible Overdraft terms. So, NRIs can enjoy both growth and convenience.

Ready to make your fixed deposit work harder for you? Contact your Relationship Manager to apply for an OD against FD with Kotak today!

This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Mutual Fund investments are subject to market risks read all scheme related documents carefully before investing.