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Fixed Deposit Sweep-in

FD Sweep-in Facility

Last Updated 23rd Sep 2020

  • Transfer the surplus amount of the stipulated savings account linked to a fixed deposit account with the sweep in facility.
  • Link the savings account to one or multiple FD accounts to avail the sweep in benefits.
  • The sweep in feature functions automatically and does not require any manual procedure from the account-holders.
  • Account-holders can set the account limit as per their own convenience.
  • No charge is required for availing the sweep in benefit.

What is Fixed Deposit Sweep In?

The sweep-in facility permits you to set a limit on savings account and auto transfer the excessive sum from it to a fixed deposit sweep-in account. Most banks allow the limit to be set in multiples of ₹ 1,000 . For availing the sweep-in facility, having a savings account linked with a fixed deposit account is a must. Banks and non-banking financial entities offer the facility of sweep account to eligible account-holders. The tenure ranges anywhere from one year to five years. 

Various banks operate the fixed deposit sweep in accounts in different names. State Bank of India offers sweep in facility where the additional amount is generated in multiples of ₹ 1,000 to the FD accounts. The fixed deposit sweep in HDFC offers provides the same facility and so does ICICI bank. However, the sweep-in facility of ICICI bank has been termed as Flexi deposit. 

Why FD Sweep-in?

Below is the set of reasons that makes sweep in FD exciting investment option.

  • FD savings are known to fetch higher returns than regular saving accounts. Hence, transferring a sum from a regular savings account to an FD account provides the scope of earning interest at a higher rate on the sum.
  • The account-holders get the advantage of setting their own account limit. Hence, one can set the limit based on their monthly expenditure.
  • The transfer is auto-generated and requires no effort or additional charge from the account-holders.

Method to Avail Sweep-in Facility

The sweep in FD facility can be availed in the two following methods.

  • Online: by visiting the net banking page of the respective bank or non-banking financial entity.
  • Offline: by visiting the branch of the respective bank or non-banking financial entity.

For availing the facility either online or offline, follow these few steps.

  • Link the savings account to the fixed deposit account.
  • Set the account limit in accordance with your requirement.
  • Select the required tenure offered by the respective bank or non-banking financial entity.
  • The excess amount will be auto-generated to the FD account each time it crosses the pre-set account limit.

How does the Sweep in facility work?

The functionality of the sweep account is quite simple. All you need to do is link the savings account with the FD account and then set the account limit along with tenure. Each time the sum in the savings account crosses the pre-decided limit, the excessive amount gets transferred to the FD account and interest on the excessive amount is accrued as per the interest rate of the FD.

Here is an illustration for a better understanding of the sweep in facility.

Suppose, you have set the savings account limit for ₹ 30,000 . The current balance in your savings account is ₹ 45,000 . In this scenario, ₹ 15,000 (₹ 45,000 - ₹ 30,000 ) will be generated to your sweep in FD account.

Savings account limitCurrent balance in savings accountSum to be generated in the sweep in FD account
₹ 30,000 ₹ 45,000 ₹ 1.50 Lakh

What is Fixed Deposit Sweep-Out Facility?

As the name suggests, sweep-out is the opposite of sweep-in. If there is a deficiency in the savings account, the required sum is generated from the FD account to meet the account limit. The terms and conditions related to fixed deposit sweep-out may vary from bank to bank. Here is an illustration for a better understanding of FD sweep-out.

Suppose, your savings account minimum balance limit is ₹ 5,000 and the current balance is ₹ 3,000 . In this scenario, ₹ 2,000 will be transferred from your FD account to your savings account to recover the deficiency.

Advantages of Sweep-in Facility

Here are the advantages that come with the sweep-in facility.

  • Enjoy seamless liquidity as sweep-in allows automatic transfer from a savings account to FD accounts.
  • One saving account can be liked to multiple FD accounts ensuring high liquidity.
  • There is no added charge or fee for availing the sweep-in facility.
  • The facility keeps an amount separated that can be used during emergencies without having to disrupt FD investments or regular investments.
  • No penalty is charged for pre-mature withdrawal.

Eligibility for Sweep-in Account

The eligibility criteria for sweep-in accounts are based on the minimum balance in FD accounts. You can make a fixed deposit of minimum ₹ 25,000 . You can opt for a premium account with a minimum monthly or quarterly balance requirement ranging from ₹ 25,000 to ₹ 1 Lakh.

Difference between Sweep-In Facility and Flexi Deposit

Sweep-in facility and Flexi deposit serve the same purpose. The fixed deposit sweep in HDFC or State Bank of India offers the same facilities as offered by the Flexi deposits of ICICI bank; however, they function a bit differently. In the sweep-in facility, the sum is auto-generated to a fixed deposit account from a savings account, the Flexi deposit requires manual updates. Account-holders have to add sums in the Flexi deposits manually.

FAQs

How does a sweep account work?

Account-holders are required to link their savings account to their fixed deposits and set an account limit. Once, the sweep account is created, the excess amount from the account is automatically transferred to the fixed deposit accounts.

What is the benefit of sweep account?

Sweep account has following benefits:

  • Sweep account generates higher returns since the interest rates on Fixed Deposits are higher than standard savings accounts.
  • Sweep accounts ensure high liquidity.
  • No additional charge is required to maintain sweep accounts.

Are sweep accounts safe?

The sweep accounts are safe as they are operated by the same bank you have invested in. It is advisable to keep track of the sweep accounts to ensure that you do not end up paying huge fees or charges and thus losing a big amount from your corpus.


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