Friday, June 5, 2009


While most of us do prefer to put our money in bank savings account for the safety and convenience it provides to us. But somewhere within us we all secretly wish for a better return on our money in savings/current account than measly 3.5% pa on savings account being paid by banks today. To precisely meet this aspiration of depositors, the banks are now offering "hybrid" products which aims to offer the safety and convenience feature of a savings account and high returns of a fixed deposit account. Hybrid products are meant to help people make more money out of their deposits in banks savings/current accounts.
There are primarily 2 kinds of products offered here by banks:-
1. Sweep In Facility
2. Auto Sweep facility
Sweep-in facility is one facility offered by banks where a savings or current account is linked with multiple FDs in the same bank. HDFC Bank’s facility is a typical example. You would need a savings or current account and FDs that are to be linked, in the same bank. Any deficit in your savings or current account will be met by a withdrawal of an exact value from your FD. Since deposits are broken down in units of Re 1, you will lose interest only on the actual amount withdrawn from the FD.In the auto sweep facility, if more than one FD is linked, the last deposit made under the scheme will be used first to meet the shortfall. If this isn’t adequate, then the deposit made prior to the last deposit will be used, and so on.
Benefits of Sweep In
- Increased flexibility to use your FD money without actually breaking the FD .
- No penalty on breaking the FD
- No need to visit the bank every time you want to use the FD amount to break the FD.
- More interest on your money,since, the remaining money in FD continues to attract FD rates.

In Auto sweep facility all you need to do is mention a threshold limit. Any amount above the limit will be converted into an FD in multiples of Rs 5,000. The linked FDs are by default of one-year period or you can go for a period of your choice. Interest rates are as revised by the bank from time to time. Maturing deposits are renewed for a year or for a period of your choice at the interest rate prevailing on the date of renewal. ICICI Banks Auto Invest account is an example.
Benefits of Auto Sweep
- Higher effective rate of interest on your money.
- No need to give extra instructions to transfer money from savings account to FD.

1.HDFC BANK,Kotak,IDBI,Indus Ind - Sweep In facility - A deficit in savings account is filled from an exact amount from FD.
2.Flexi Fix Deposit - Bank Of Rajasthan ,Oriental bank Of Commerce -Operative Savings or current account is linked with FD.
3.Smart Saver Account - Yes Bank - High returns from FDs and liquidity of savings account.
4.Multi-Option Deposit Scheme - State Bank Of India -Combines savings or current accounts with savings.
5. Savings Plus account- Bank OF Baroda.

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