SBI has increased the minimum limit of auto-sweep in MOD scheme from Rs 35,000 to Rs 50,000, due to which customers with small balance will lose interest
State Bank of India (SBI) has made changes in its auto-sweep facility. Under this facility, the excess amount in the savings account is converted into fixed deposit. Now customers will have to keep at least Rs 50,000 in their savings account. Earlier this limit was Rs 35,000. This change will affect those customers who used to keep low balance and used to take advantage of this facility.
What is Multi Option Deposit (MOD) facility?
This facility of SBI is called Multi Option Deposit (MOD) scheme. Under this, the amount of more than Rs 50,000 in the savings account is automatically transferred to fixed deposit. This amount changes in units of Rs 1,000. These deposits earn higher interest than savings account. This interest is equal to the rates of normal term deposit.
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Instant withdrawal when you need money
The special thing about this facility is that if the balance in the savings account decreases, the bank automatically transfers the money back from MOD. This is called reverse sweep. This allows customers to get money immediately when needed. This facility is better for those who want more interest but do not want to lock their money.
Interest and Premature Withdrawal Rules
Interest on MOD deposit is added every three months and is paid on maturity. If the customer withdraws the money before time, then a small penalty is charged. But the remaining amount continues to earn interest at the fixed interest rate. Senior citizens also get the benefit of additional interest on this deposit. This benefit is given as per the rules of the bank.
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Impact of the new limit
The new limit of Rs 50,000 may harm customers with small balances. Earlier, the benefit of auto-sweep was available on amounts above Rs 35,000. Now, those who have a balance between Rs 35,000 and Rs 50,000 in their account will not get interest on fixed deposits. This amount will now remain in the savings account only. However, this facility will remain beneficial for customers with higher balances as before.
Advice for customers
SBI has advised customers to check their account balance after this change. Those who have more than Rs 50,000 in their account can take advantage of this facility. This scheme is better for those who want good returns while keeping their money safe.
