Here are the two possibilities that I feel can happen
1. Interest continues to be paid on the remaining FD balance:
In some cases, the bank may allow you to continue receiving the monthly payout on the remaining balance of your FD after taking a loan against it.
2. Interest payments are stopped:
In other cases, the bank may stop the monthly payout on your FD once you take a loan against it. Instead, the interest earned on the entire FD will be used to offset the loan interest. This means you won't receive any monthly payments until the loan is fully repaid.