Your FD: ₹5,00,000 at 7% p.a.
Loan Amount: ₹4,50,000 (90% of FD)
Loan Interest: 8.5% p.a. (1.5% above FD rate)

Your FD earns: 7%
You pay: 8.5%
Net Cost: 1.5% only!

FD continues till maturity
Interest keeps accruing

Good Scenarios:
✓ Short-term cash need
✓ FD has good rate locked in
✓ Emergency but FD penalty is high
✓ Lower rate than personal loan
✓ Tax-saving FD (can't break)

Not Ideal:
✗ Long-term borrowing
✗ Can get cheaper alternatives
✗ If you can actually use the FD amount

Process (Same Bank):
1. Visit branch or net banking
2. Select FD to pledge
3. Apply for overdraft/loan
4. Instant approval
5. Funds credited immediately

Process (Different Bank):
1. Transfer FD lien to lending bank
2. Slightly longer process
3. Higher rate usually

Tax-Saving FD (5-year lock-in):
- Can't premature withdraw
- CAN pledge for loan
- Up to 75% of value
- Good for emergencies

Note:
- FD tenure continues
- Lock-in remains
- Tax benefit intact

Equity MF Portfolio: ₹10,00,000
LTV: 50%
Loan Available: ₹5,00,000

Debt MF Portfolio: ₹10,00,000
LTV: 65%
Loan Available: ₹6,50,000

Note: LTV varies based on:
- Fund category
- NAV volatility
- Lender policy

Critical to Understand:

If MF Value Drops:
Initial Value: ₹10,00,000
Loan: ₹5,00,000 (50% LTV)

Value Drops to: ₹7,50,000
LTV Now: 67% (above limit!)

Margin Call:
- Pledge more securities OR
- Repay partial loan OR
- Lender may sell units

Platforms Offering:
- Stock brokers (Zerodha, Groww, etc.)
- Banks (HDFC, ICICI, etc.)
- NBFCs (Bajaj Finserv, etc.)
- Dedicated platforms (Orowealth, etc.)

Process:
1. Select MF units to pledge
2. Mark lien with registrar
3. Loan sanctioned
4. Overdraft facility activated
5. Use as needed, pay interest on utilized

Overdraft Style (Common):
- Only pay interest on amount used
- Daily interest calculation
- Repay anytime

Example:
Limit: ₹5,00,000 at 11%
Used: ₹2,00,000 for 15 days
Interest: ₹2,00,000 × 11% × 15/365 = ₹904

Typically Accepted:
- Large cap stocks
- NSE/BSE listed
- From approved list
- Minimum value requirements

Usually Not Accepted:
- Penny stocks
- Illiquid stocks
- Stocks under surveillance
- Promoter holdings

Portfolio: ₹20,00,000 (Large Caps)
LTV: 50%
Available Loan: ₹10,00,000

Interest Rate: 9-14%
Tenure: Flexible (overdraft)
Repayment: Interest only monthly, principal flexible

Stock Prices Fluctuate Daily:

Day 1:
Portfolio: ₹20,00,000
Loan: ₹10,00,000
LTV: 50% ✓

Day 15:
Portfolio drops to: ₹16,00,000
Loan: ₹10,00,000
LTV: 62.5% (Above limit!)

Action Required:
- Deposit cash margin OR
- Pledge more shares OR
- Partial loan repayment OR
- Lender sells shares to restore LTV

Accepted:
✓ Endowment plans
✓ Whole life policies
✓ Money-back policies
✓ ULIP (after lock-in)
✓ LIC policies (preferred)

Not Accepted:
✗ Term insurance
✗ Pure health insurance
✗ Policies in lapsed state
✗ Policies under claim

Policy Premium Paid: ₹5,00,000
Policy Term: 20 years
Current Surrender Value: ₹3,50,000

Loan Available: ₹2,80,000 (80% of SV)
Interest Rate: 10%

Monthly Interest: ₹2,333
Can be paid from policy bonus (sometimes)

Steps:
1. Visit nearest LIC branch
2. Submit policy bond
3. Fill loan application
4. Verification (1-2 days)
5. Loan credited to account

Requirements:
- Original policy bond
- ID proof
- Address proof
- Bank account details

G-Secs, State Development Loans:
- LTV: 85-90%
- Interest: Lower than other securities
- Very safe for lenders

Example:
G-Sec Value: ₹10,00,000
Loan: ₹8,50,000
Rate: 7-8%

Eligibility:
- Listed bonds/NCDs
- Investment grade rating
- From approved list

LTV:
- AAA rated: 70-80%
- AA rated: 60-70%
- A rated: 50-60%

Situation:
- Need ₹10 lakhs for property payment
- FD maturity in 3 months
- Don't want to break FD

Solution:
- Loan against FD for 3 months
- Repay when FD matures
- Cost: ~0.5% (net after FD interest)

Situation:
- Need ₹5 lakhs
- Have MF portfolio worth ₹15 lakhs
- Selling would trigger capital gains tax

Without Loan:
- Sell MF: ₹5 lakhs
- Capital Gains Tax: ₹50,000 (assuming 10%)
- Net available: ₹4,50,000

With Loan Against MF:
- Borrow ₹5 lakhs
- Interest for 6 months: ₹30,000
- Repay when convenient
- No capital gains triggered
- Save ₹20,000!

Situation:
- Found great stock opportunity
- All capital already invested
- Don't want to sell existing holdings

Solution:
- Pledge existing shares
- Get loan against shares
- Invest in new opportunity
- Repay when trade works out

Risk: Leverage amplifies gains AND losses

Situation:
- Business needs ₹20 lakhs temporarily
- Have FDs worth ₹25 lakhs
- Business loan process is slow

Solution:
- Loan against FD
- Same-day disbursement
- Use for business
- Repay when receivables come
- Much faster than business loan

Market-Linked Securities (Shares, Equity MF):
- Value fluctuates daily
- LTV monitored continuously
- Margin calls can come suddenly

Prepare:
- Keep buffer (don't use 100% limit)
- Have liquid funds ready
- Monitor portfolio regularly

If Not Paying Regular Interest:
Interest compounds and adds to loan

Year 1: ₹5,00,000 at 10%
Year 2: ₹5,50,000 (unpaid interest added)
Year 3: ₹6,05,000
Year 4: ₹6,65,500

FD Maturity: ₹6,50,000 (at 7%)
Loan Balance: ₹6,65,500
Shortfall: ₹15,500!

Always pay interest regularly

If Loan Not Serviced:
- Securities can be sold by lender
- Usually at market price
- May be bad timing
- You lose investment position

For Shares:
- Can happen in 2-3 days
- No court order needed
- Broker can liquidate directly

While Pledged:
- Can't sell the securities
- Can't transfer
- Dividend/interest still received
- Capital appreciation yours

But:
- No flexibility to sell
- Must unpledge first
- Process takes 1-2 days

Ask Yourself:
1. How long do I need funds?
   - Short (<3 months): FD, Insurance
   - Medium (3-12 months): MF, Shares
   
2. What's my risk tolerance?
   - Low: FD, Debt MF, Insurance
   - Medium: Equity MF, Shares
   
3. Rate sensitivity?
   - Most sensitive: FD loan best
   - Less sensitive: MF/Shares acceptable
   
4. Can I handle margin calls?
   - No: Stick to FD, Insurance
   - Yes: Shares, Equity MF okay

Need ₹5 lakhs:

FD Loan:
- Rate: 8% | Cost/year: ₹40,000
- Risk: None | Hassle: Very Low

MF Loan:
- Rate: 11% | Cost/year: ₹55,000
- Risk: Margin call | Hassle: Medium

Share Loan:
- Rate: 12% | Cost/year: ₹60,000
- Risk: Higher margin | Hassle: Higher

Insurance Loan:
- Rate: 10% | Cost/year: ₹50,000
- Risk: Policy risk | Hassle: Low

Decision: FD loan if available!

Negotiate By:
- Comparing across lenders
- Highlighting total relationship
- Asking for existing customer discount
- Checking promotional offers
- Choosing overdraft vs. term loan

Typically Required:
- KYC documents
- Demat/FD statement
- Income proof (sometimes)
- Authority letter
- Lien marking forms

Fastest Options:
1. Same-bank FD loan (instant)
2. Broker LAS (same day)
3. Online MF loan platforms (1-2 days)
4. LIC loan (2-3 days)