Loan Against NSC

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Loan Against NSC

India is home to the largest number of post offices globally. Leveraging this network, the government of India is set to launch the National Savings Certificate (NSC) scheme, which offers a highly secure option to obtain loans.

What are National Savings Certificates (NSC)?

National Savings Certificates are fixed-income investments available at any post office, enabling small and middle-level investors to save on income tax. NSCs are available with two fixed maturity periods – 5 years and 10 years.

Using NSC as Security for Loans

NSCs can be used as collateral to avail loans. With the backing of the Government of India, NSCs are considered one of the safest options for loans due to their low-risk nature and stable interest rates.

Features of NSC

  • Lower Interest Rates: Currently fixed at 6.8% annually, offering lower rates than personal loans.
  • Minimum Investments: Purchase NSCs for as low as Rs. 100, with other denominations ranging from Rs. 100 to Rs. 10,000.
  • Flexible Maturity Tenure: Choose between 5-year and 10-year maturity periods.
  • Nomination Facility: Investors can nominate family members, including minors, ensuring continuity of investments.

Process for Taking a Loan Against NSC

  1. Obtain NSC from the post office.
  2. Approach a bank of your choice to avail of the loan facility.
  3. The post office pledges the NSC in favor of the scheduled bank.
  4. Submit a joint application signed by both the lender and borrower, directing the post office to pledge the NSC to the bank.

Loan Against NSC Eligibility

  • Must be an Indian citizen.
  • Applicant must be at least 18 years old.
  • No age limit for NSC purchases.
  • Non-resident Indians cannot invest in NSC.

Documents Required

  • Valid government ID proof.
  • Income proof.
  • Passport size photograph.
  • Original NSCs for collateral.

Interest Rates and Repayment

  • Interest rates for NSCs are currently 6.8% annually, compounded annually.
  • Repayment period varies based on the loan amount.

Procedure for Taking a Loan Against NSC

  1. Fill Form NC41, available at post offices or online.
  2. Obtain approval from the post office and submit to the bank.
  3. Pay necessary fees to the post office.
  4. Upon pledge release, post office transfers certificates to the bank.
  5. Repayment period is determined by the loan amount.

Using NSC as security for loans offers a reliable and accessible financing option for various needs. Contact us for more information on loan against NSC facilities.

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