Auto Sweep Account – Enable it in your Saving Bank Account

Do you have a Bank Account? Off-course you do! How much money do you have in your account? 5,000? 20,000? or a few lacs? If you have a lot of cash, lying idle in your Bank Account, and at the same time you don’t want to commit to long-term investment, you need to enable the Auto-Sweep facility in your Savings Bank account. This will make sure you earn good interest on a major part on the cash lying in your Savings account.

Auto Sweep Bank account

What is Auto-Sweep Account ?

“Auto Sweep” is a facility which provides, the combined benefits of a Savings Bank account and Fixed Deposits. Auto-Sweep facility interlinks your saving bank account with a Deposit account and makes sure any extra amount lying in your bank account above a threshold limit is automatically transferred to Fixed deposits and you earn better interest on your money.

How ‘Auto Sweep’ works?

This is how Auto-Sweep works. You define a “threshold limit”, and money up to that limit will be in the form of cash in your savings account and any amount above this, “limit” will automatically be converted into a Fixed Deposit and you will start earning normal FD returns on that part of the money. At any point in time, if you need money more than is lying in your bank account, the money lying in the Fixed Deposits is Reversed-sweeped into your savings account and you can withdraw the amount you wish.

Example

Ajay opens a new Savings Bank account with SBI. He enables Auto-Sweep facility on his savings bank account and defines the threshold limit of Rs 30,000 . Now suppose he has Rs 10,000 lying in the bank, He will be earning normal 3-3.5% interest on this money. After that if he deposits Rs 60,000 in his account, his total balance would be 70,000. But as this is above his “threshold limit”, the extra amount of 40,000 will be converted into a fixed deposit automatically and start earning returns equal to normal Fixed deposits with SBI (for example 8%). This way he always has 30,000 in his account for his daily requirements, and he has 40,000 converted into Fixed deposits which again is available to him incase he requires it.

Now suppose he has to withdraw 10,000 from his account, he will actually withdraw it from the cash lying in saving bank , and his balance will reduce to 20,000. However on the other hand if he wants to withdraw Rs 50,000 . then in that case, as his account balance will be just 30,000, an additional Rs 20,000 will be auto-reversed from his Fixed Deposit and he can withdraw total 50,000 .

Opportunity cost

A lot of us don’t bother about how much idle money is lying in our account and for how long. This happens because we think “I might need it soon, so lets not commit to any investment.” But then, the money keeps lying in the bank for months and months and sometimes even years.

Suppose your account has Rs 1 lac for 1 year, it will earn 3.5% interest on it, which is Rs 3,500 for a year. However if you have auto-sweep enabled in your savings account with threshold limit of Rs 20,000, the additional 80,000 will actually be in form of a fixed deposit and it will earn an interest of 8% (assumption). In this, you will earn 3.5% of 20,000 which turns out to be Rs 700 and 8% of 80,000 which is Rs 6,400 , a total of 7,100 , which is almost 100% more than the first case .

A lot of people have much more than 1 lac in their accounts, not just 1 lac. You can earn some extra returns if you just enable auto-sweep on your saving account . So find out if your bank provides the facility, just do it, and get it right away!

Also note that different banks have different names for this facility. For eg., ICICI Bank calls it ”Auto Sweep” , HDFC Bank calls it “Sweep-In” account , and SBI calls it “Saving Plus.” . Here is a list of other banks and the name by which they call this Auto-Sweep facility (thanks for Gopal Gidwani for the info)

  • IDBI Bank – Sweep-in Savings Account
  • Axis Bank – Encash 24
  • Union Bank – Union Flexi Deposit
  • HDFC Bank – Super Saver Facility
  • Bank of India – BOI Savings Plus Scheme
  • Oriental Bank of Commerce – Flexi Fixed Deposit Scheme
  • State Bank of India – Multi Option Deposit Scheme
  • Allahabad Bank – Flexi-fix Deposit
  • Bank of Maharashtra – Mixie Deposit Scheme
  • Corporation Bank – Money Flex
  • United Bank of India – United Bonanza Savings Scheme

Disadvantages of Auto-Sweep Account

Auto-Sweep has some disadvantages too. In general the interest rates of normal fixed deposit and FDs under Auto-Sweep are same, but some banks charge a penalty if the FD under auto-sweep accounts are broken before some duration like 1 yr and 1 day . But I think that’s fine.  If not 8% , you will at least get 7%, still better than 3.5% .

Some banks are also known to give simple interest on the Auto-sweep Fixed Deposits and not compound interest as in case of normal fixed deposits .

Don’t over do it

While Auto-sweep is a wonderful thing for salaried class people who want to maintain liquidity, as well as want to earn more interest on their unused money, one should not over do it. If you are very sure that the money lying in your account will really not be used for long, better to use the normal Fixed deposit or Debt funds. Only if you are unsure of your money lying in bank and when you might need it, you should be using Auto-Sweep facility.

The way auto-sweep works, it makes it an ideal place to park emergency funds . So if you have kept 6 months of expenses as your emergency fund in Saving Bank, then you can enable auto-sweep facility and set threshold limit as 2-3 months of expenses, so that rest of the money can earn a better interest.

Comments: Did you know about Auto sweep account earlier? Do you think it will be helpful for you and do you plan to enable it?

489 CommentsAdd Comment

  1. AJIN

    Does federal bank provide sweep in facility ?
    How much is the interest rate for the amount that gets sweeped in SBT?

  2. MANPREET

    Dear Sir/Madam,
    i am a Salaried Person with Montly income of aorunf 25000 and 1 lakh maintained in My Sbi Account. I will have loan amount of Rs 100000 in my Account. I am interested in Converting into Sweep Account. So is it Benificial to Convert my Account into Sweep in as i have to Use Most of the Loan amount.
    Pls Suggest.

  3. Dear sir i have rs 80000 in my sbi saving account i want interest on it but i cant do fd of it cause in some emergency sitution i need it alll money so wht shall i do ? can i convert it into sbiplus account ? and can i get all money from sbi plus account when i need it in emergency setuation? so plz guide me i m so confused sir

  4. ilyas

    thanks for the info..

    i want to know is there any acknowledgement for the amount that is available in fixed account???

    as one cant remember the total amount that is getting sweeped///

  5. I OPTED FOR SAVING PLUS ACCOUNT. AFTER ONE TIME SWEEP TRANSFER MY MONEY IS NOT BEING SWEEPED TO SAVING PLUS ACCOUNT. BRANCH MANAGER SBI. BHOJPUR COLONY, RAM LAKHAN PATH, NEAR BY PASS ROAD PATNA IS SAVING I CAN’T DO ANYTHING. Where should I contact for help

    • Hi Ramakant

      I suggest that you now take the RTI route. You can file the RTI and ask your queries to them. THey are bound to reply you on your queries.

      Its a bit long cut, but works well

      Manish

  6. Nitin Singh

    Do you have any idiea about the facility providing by SBI? As i went there to inquire , but still not got clear picture, though now i am clear very much after reading this article . I just want to know about the SBi service.

      • Ashish

        Hi Nitin
        I found this service also in SBI.
        If you have net banking in your SBI A/C you can activate this facility online no need to go to bank.
        For this logon to your sbi and go to fixed deposit tab and then you will found Auto Sweep Option
        click on that select your account and enter OTP & fallow next steps as you wish.

        Hope this help you……….

  7. irfan bhat

    I want to know like i hav a bal 50000. Then sbi sweeped 25000 then the bal was 25000. Now i withdraw money all. But my account show nil balance. When and how my money will get into my account back?

  8. nabarun

    in SBI my threshold limit is 25000. So i want to know that whenever my balance is crossed the limit then the extra amount is sweeped? or after a particular time the money was sweeped?

  9. Abhi

    SBI – Does “saving plus” a/c passbook says – Saving Plus ?
    As I have regular saving a/c with SBI. Opened new saving plus a/c too.
    Both passbook . 1st page , a/c type says – Saving a/c
    Doesn’t it should say “Saving Plus” in case of saving plus a/c ? Also since it is autosweep , should it open FD / eTDR automatically ?

    • Hi Abhi

      Your cases is a bit complex and I think we are not the right people to comment on it.

      My suggestion would be hire someone who is professional in this area and consult them

      Manish

      • Abhi

        Thanks Manish.
        For my SBI saving plus a/c. autosweep worked automatically.
        Indian banks don’t differentiate a/c type on passbook. There should be column on passbook where it should clearly say a/c type – regular , premium, saving plus , titanium etc etc ..

  10. M Hari Krishna Chauhan

    Hi Manish,

    Very useful information. I have few questions reg this MOD and when I was searching on google I got a chance to visit your site. I hope u will be able to help me in understanding these MOD in a better way.

    I am holding a account in SBI which is a salary account.

    First thing, the bank didn’t even inform me about this account and on a fine day I saw that there is some discrepancy with my amount. Went online and saw that the 15000/- was moved to a different account. I called the cust care of the bank and when enquired they said that it is a MOD account without giving any further information they closed my call. Now when I was reading the article and few comments, I see that a form needs to be submitted (15G 0r 15H). Can you please help me understand what is these form and is these MOD really useful or will I face any consequences when I really need the money back.

    Please Yaar, help me in understanding.

    Thanks,
    Chauhan

  11. SONIA RAJ

    HI,
    FIRST OF ALL THANKS FOR THIS VERY USEFUL ARTICLE. I HAVE 2 QUERIES –

    1. EVERYTIME MY A/C EXCIDES Rs.10,000/-, A NEW E-TDR WILL OPEN. SO, WILL I HAVE TO SUBMIT SEPARATE 15G / 15H FOR ALL E-FD A/C ?

    2. MINIMUM DAILY BALANCE SHOULD BE Rs. 10,000/-. SO IF I HAVE ,SAY Rs.1,00,000/- IN MY MOD A/C AND I HAVE Rs. 5,000 IN MY NORMAL A/C FOR AN ENTIRE YEAR, WILL I HAVE TO GIVE THE PENALTY ?

    PLEASE CLARIFY .
    THANK YOU.

  12. subhanka77

    what number of transaction(withdraw) is allowed in saving account per day or per month @ SBI as i do mobile top up a lot using net banking sometimes 2 top up a day?

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