What to Choose When FDs Aren’t Enough: Backup Liquidity Options

If you’ve ever found yourself breaking a Fixed Deposit (FD) to pay for an emergency — be it a sudden medical expense, a child’s school fee, or an unplanned home repair — you’re not alone. Many of us in India were raised with the idea that FDs are the safest way to park our savings. 

And while that’s not entirely wrong, it's no longer the most flexible or rewarding option in today’s world. What if you could access liquidity during emergencies without touching your savings or compromising on growth? 

Why Fixed Deposits Might No Longer Cut It

Fixed Deposits offer a sense of security, but that comes at the cost of rigidity. With long tenures and penalties for premature withdrawals, they often fall short when you need access to funds urgently. Even worse, real returns after tax and inflation tend to be underwhelming.

Take the case of Anil, a salaried professional from Pune. He locked away ₹5 lakhs in an FD for 5 years. Two years in, a family medical emergency forced him to withdraw. Not only did he lose a chunk in penalties, but he also earned less than what a liquid fund would have offered for the same duration.

Smart, Flexible Alternatives for Backup Liquidity

Looking for liquidity that doesn’t compromise growth? Here are some reliable alternatives worth considering.

Loan Against Mutual Funds (LAMF)

This is a game-changer for mutual fund investors. You can borrow against your existing mutual fund units without redeeming them. Since the investment stays intact, you continue to benefit from market growth. Interest is paid only on the amount utilized, and EMIs can be structured as interest-only. Ideal for quick liquidity needs without disturbing your investment plan. Read More about Loans against Mutual Funds here.

Liquid Mutual Funds & Overnight Funds

These funds offer near-instant liquidity, with same-day or next-day redemptions. With typical returns ranging from 4–6% p.a., they’re a step up from a savings account. They’re also tax-efficient if held for over three years. Perfect for building an emergency corpus that stays accessible.

RBI Floating Rate Savings Bonds

Issued by the Government of India, these bonds offer a safe haven for those focused on capital preservation. Though they come with a 7-year lock-in, the returns (currently ~7.35% p.a.) are linked to NSC rates and are far better than many FDs. Best suited for retirees or extremely risk-averse investors.

Corporate Bonds & NCDs

Non-Convertible Debentures (NCDs) and high-rated corporate bonds can yield 8-10% annually. While liquidity isn’t guaranteed, many are listed on exchanges and can be sold if needed. Stick to AAA-rated instruments to minimise risk. A good fit for those with medium-term financial goals.

Gold Loans, LAS & Credit Lines

Why sell your assets when you can borrow against them? Gold loans, Loans Against Securities (LAS), and instant credit lines use your existing assets as collateral. They offer faster disbursals, lower interest rates than personal loans, and require minimal paperwork. Particularly helpful for business owners or self-employed individuals who prefer flexibility.

Comparing Alternatives: What Works for Whom

Each of these options has its own advantages, depending on your financial profile:

• Salaried professionals often prefer LAMF or liquid funds for their instant access and flexibility.
• Senior citizens may lean towards RBI bonds for their safety and predictable returns.
• Entrepreneurs can benefit from LAS or a credit line that offers on-demand access to capital.
• Risk-averse savers might find comfort in liquid funds or AAA-rated NCDs.

How Quicklend Helps You Stay Liquid Without Selling

At Quicklend, we understand that emergencies don’t wait. That’s why our Loan Against Mutual Funds product is designed for speed, ease, and flexibility. You can get disbursal in as little as 4 hours, entirely online, with no paperwork. Our interest-only EMIs and zero foreclosure charges ensure you repay on your terms — without touching your investments.

We’re fully aligned with RBI guidelines, ensuring a secure, compliant, and trustworthy journey. Your money keeps working for your future, even as you navigate the now.

Conclusion:

The world of finance has evolved, and so should your liquidity strategy. Fixed Deposits are no longer the only refuge for safe savers. Whether it’s Liquid Funds, Credit Lines, or Loan Against Mutual Funds — today, there are smarter ways to stay liquid and invested. Emergencies don’t wait for your FDs to mature. But now, your liquidity doesn’t have to wait either.

This is general guidance. For personalized loan advice, contact our team at Quicklend

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