The State Bank of India (SBI) has increased the minimum balance required to trigger the auto sweep facility in savings accounts from ₹35,000 to ₹50,000. SBI has informed all the Customers about this change via email. The email stated that the next Multi Option Deposit (MOD) will now be created once the savings account balance crosses ₹50,000.
What is SBI’s Multi Option Deposit (MOD) Scheme?
The MOD scheme of SBI allows account holders to earn a higher rate of interest compared to a regular savings account. When the balance in a savings account goes above the set limit, the surplus amount is automatically transferred into a fixed deposit (MOD). If at any time the savings account does not have enough funds to clear a transaction, the bank will reverse sweep money from the MOD back into the savings account—either partially or fully.
Key Features of this scheme
- Deposit tenure: 1 to 5 years
- Higher Interest: Surplus funds are converted into fixed deposits, earning higher interest.
- Automatic Reverse Sweep: In case of insufficient balance in the savings account, money is transferred back from the MOD.
- Interest Payment: Interest is compounded quarterly and credited accordingly.
- Premature Withdrawal: If an MOD is broken before maturity, the withdrawn portion is paid with a penalty at the applicable interest rate, while the remaining balance continues to earn interest.
- TDS Deduction: Tax is deducted at source as per rules.
- Senior Citizens Benefit: Senior citizens get additional interest; however, super senior citizens do not get any extra benefit under this scheme.
Reverse Sweep & Withdrawal Rules
If you want to withdraw your money then it can be made in units of ₹5,000 and multiples thereof. Once the balance in the Term Deposit Receipt (TDR) reaches ₹15,000, the full amount is transferred back to the savings account, irrespective of requirement. By default, withdrawals happen on a Last-In-First-Out (LIFO) basis, though customers can opt for First-In-First-Out (FIFO) if they wish.
When an MOD deposit matures, the entire principal plus interest (after adjusting any withdrawals) is automatically credited to the linked savings account.
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