Wednesday, February 11, 2015

Loans against Deposits

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Situational Question
A customer has made a Fixed Deposit of Rs. 10 lakh in your branch. He comes in your branch and asks you to break his FD, because he needs some urgent money. What will you do?

You need to make him aware of Loans against Deposits, and the benefits involved in it. Tell him that he can get his urgent money, without breaking the Fixed Deposit. The loan you can provide him against the FD, will bear less interest, than the traditional loans.

So he has several advantages -

  • No need to break FD, which can be retained for future use (may be for more serious issue)
  • Interest rate charged in Loans against Deposits is much less, than the traditional loans
  • No need to provide other collateral (like mortgages, pledge, etc.), because the FD will act as collateral

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Happy learning!

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