For most people, money sitting idle in a savings account earns minimal interest. However, banks now offer a smart option called the Auto Sweep facility, which allows customers to convert excess savings into fixed deposits (FDs) automatically. This not only ensures higher returns but also provides the flexibility of liquidity whenever funds are needed.
What is Auto Sweep Facility?Auto Sweep, also known as Multi Option Deposit (MOD) in the case of the State Bank of India (SBI), links your savings account with a fixed deposit account. Whenever your savings account balance crosses a pre-defined limit, the surplus amount is automatically transferred to an FD. This FD earns the same rate of interest as a regular term deposit, which is often three times higher than the savings account rate.
If you require the money later, the amount is seamlessly transferred back into your savings account. This ensures that your funds are both liquid and rewarding.
SBI MOD Scheme – Updated LimitRecently, the State Bank of India (SBI) revised the minimum threshold for its MOD scheme. Earlier, the Auto Sweep would activate once your account balance exceeded ₹35,000. Now, SBI has raised this limit to ₹50,000. That means the Auto Sweep kicks in only when your account balance crosses this new mark.
This change encourages customers to maintain a higher balance for automatic FD creation while still enjoying flexibility of withdrawals.
Interest Rate and Compounding BenefitThe MOD deposits under SBI earn quarterly compounded interest, just like traditional fixed deposits. This means your interest is calculated every quarter and added to the principal, allowing you to earn interest on interest over time. Naturally, the longer you keep the funds, the higher your returns.
Benefits for Senior CitizensSBI offers additional interest rates for senior citizens under the MOD scheme, making it especially attractive for retirees who want safety and better returns. However, super senior citizens (above 80 years of age) do not get any extra benefit beyond what regular senior citizens receive.
Key Advantages of Auto Sweep FacilityHigher Returns Without Effort – Your money earns FD-like interest without you having to manually create deposits.
Liquidity Anytime – If you need funds, the FD can be broken automatically, and money is transferred back to your savings account.
No Need to Visit Bank – The entire process is automated, saving time and effort.
Flexible Usage – Suitable for people who maintain a good balance and want the best of both worlds – higher returns and instant liquidity.
SBI customers can activate the MOD facility through Internet Banking or the YONO app in just a few clicks. Other banks also offer similar services, often under different names, but the activation process is largely the same – simple and digital.
Things to Keep in Mind-
Always check the minimum balance requirement set by your bank.
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Remember that Auto Sweep only works for the excess amount above the threshold limit.
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Interest rates may vary slightly between banks, so compare before opting in.
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While senior citizens benefit from higher rates, those above 80 years should carefully review the terms.
The Auto Sweep facility is a perfect blend of savings account flexibility and FD returns. For individuals who maintain higher balances, it is a smart way to earn more without compromising on liquidity. By activating this feature, you ensure that no part of your money lies idle, and every rupee works harder for you.
So, if you wish to maximize returns while keeping your funds accessible, enabling Auto Sweep on your savings account could be the most rewarding decision.
