Loans Against NSC Bonds

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Published: 19th January 2011
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When you are in desperate need of cash, you tend to weigh all your options and sources of income, dig out your savings, seek help from family and friends or opt for personal loans, loan against property from bank. Availing a loan against your National Savings Certificate (NSC) is one such option which benefits you in a number of ways.

What NSCs are:

National Savings Certificate is a bond issued by the Department of Post, Government of India across the country to anyone who wishes to invest in a long term savings scheme (6 years). It increases your invested amount and also exempts you from paying tax on the amount of the bond. Since there is no lid on the amount you can invest in NSC, you can buy them for any amount you want starting with Rs100.

Loan process:

These NSCs come handy as a security deposit when you require a loan according to your requirement for example personal loans. All nationalized banks, some private banks, and financiers support this form of loan. To start with the process, you need to go to the same post office that granted you the NSCs and pick up relevant forms based on the number of NSCs you plan to pledge. On approaching a bank, you need to fill the form with details about your NSCs. The bank manager will verify the details and sign indicating his approval. You need to again go back to the post office and pay a processing fee of Rs5/- per NSC bond that you pledge. The post office will check and confirm the pledging by stamping a seal on the bonds with the name of your bank giving you the loan. Submit the NSC bonds to the bank manager and fill up a loan application form similar to the regular loan request processes. The sanctioned loan amount will be transferred to your bank account within 2 working days time. The loan amounts sanctioned is usually calculated as 75% of the face value of your bonds (it is similar to that of loan against property, here the property is your bond) and the interest amount accrued from the bonds till the date of loan application. The banks may charge you a small fee as processing charges too.


The only eligibility for availing a loan against your NSC bonds is that the bonds should be in your name, if you are the applicant. The loan amount and tenure also depends on the number of years that the bond has left to reach maturity.

Benefits of loans against NSC bonds:

The process of availing loans against NSC bonds is fairly simple and fast thus ensuring you receive the loan amount in no time as compared to the formalities for availing other loans like personal loans. There is no extensive paperwork involved and interest rates are not very high. This type of loan especially works as a boon for rural citizens as they face hardships to avail loans such as personal loans, home loans or business loans from banks without much property to show for or have their property already pledged with the local financier. The NSC bonds can be unfledged once you clear the loan amount.

Loans against NSCs help the system because they make good use of the invested money and helps in revenue generation.

Dev Kumar is a financial adviser and an expert author, has 8 years of experience in writing finance related topics. He has written articles about Personal loans, Business loans.

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