mumbai the biggest provider of secured personal loans is not any highstreet bank with thousands of branches and an army of direct sales agents its life insurance corporation lic the countrys largest financial institution indeed the insurer has given more personal loans against security than all banks taken together in june lic surpassed the banking industry with secured personal loan outstanding of around rs 60000 crore in comparison commercial banks disbursed secured personal loans amounting to rs 58000 crore according to reserve bank of india data and numbers shared by lic officials while lic lends against insurance policies sold by the insurer banks give secured personal loans against fixed deposits and securities lic unlike banks does not give unsecured personal loans a segment dominated by banks whenever a customer in difficulty approaches us to surrender hisher policy we encourage the person to take a loan instead this benefits us as well as policyholders the policy continues to be on our book while the policyholder gets liquidity and does not lose life cover a senior lic official told et lic charges an interest of 10 on such loans about a quarter or halfapoint less than the interest charged by most banks the loan tenure is linked to the remaining life of the policy and the maximum amount disbursed is 90 of the surrender value of the policy in case of death the amount is adjusted against the loan and the balance is given to nominees lic officials typically advise policyholders that it makes sense to continue with a policy rather than cancel it and take a new one as the premium outgo increases with age loan against policy can be availed against traditional policy where returns are linked to the bonus declared every year bulk of lics premium income is from traditional policies unlike private life insurers for whom unitlinked plans constitute a substantial portion of the assets under management nearly rs 54200 crore is disbursed by banks as loan against fixed deposits fds and rs 3600 crore is provided as loan against equity according to data compiled by the central bank banks lend up to 8090 of the fd value at an interest that is one percentage point higher than the return on the fd