What is Sweep- In Facility in Fixed Deposits?

While there is no shortage of investment options in India, Fixed Deposits (FDs) have retained their popularity. Moreover, to keep up with customer expectations, leading banks now offer different types of Fixed Deposits, like Regular FDs, Tax-Saving FDs, and more.

One such type of Fixed Deposit is FD with a Sweep-In facility. Let’s take a look at what is Fixed Deposit Sweep-In, its features, workings, and more.

A Sweep-In FD is very much similar to a Regular FD. But in case of a financial emergency, it allows the account holder to use funds from the FD Account without breaking the FD.

With the Sweep-In facility, you can link one or more Savings or Current Accounts to the FD Account. Then, if there is any shortage of funds, the deficit amount is automatically swept into the linked Savings or Current Account without the need for additional instructions.

Now that you know Fixed Deposit Sweep-In meaning, let’s take a look at some of the top features and benefits of this facility:

• Manage Fund Shortages

A Sweep-In FD allows customers to better manage financial emergencies without worrying about additional costs like overdraft fees, bounced cheque penalties, or charges for not paying EMIs. 

• No Need to Break Entire FD

With the Sweep-In facility, customers don’t have to break their FD Accounts in case of a financial emergency and lose out on their interest income.

• Generate Higher Interest

As long as the amount remains in the Sweep-In FD, it’ll continue to earn interest at the pre-fixed rate.

Let’s assume Mr. Rakesh opened a Fixed Deposit with a Sweep-In facility and deposited INR 1 Lac into the account. He linked his Savings Account to his Sweep-In FD. Two months after opening the FD Account, there was a shortage of INR 15,000 for clearing his Home Loan EMI of INR 40,000.

So, when the bank receives the EMI request, it will transfer INR 15,000 from the FD Account to his Savings Account to ensure the transaction is processed successfully. The remaining amount (INR 85,000) will remain in the FD account and continue to generate interest. 

The steps to apply for a Sweep-In FD depend on the bank you select for the account. For instance, with AU Small Finance Bank, you can conveniently open a Sweep-In FD Account from the comforts of your home by using any of the digital channels, like AU 0101 App, AU 0101 NetBanking, or AU Video Banking.

If you prefer the offline method, you can visit the nearest branch of the bank to fill up the account opening form and submit relevant details and documents.

Here are some of the most significant differences between a Sweep-In FD and a Regular FD:

• Sweep-In FD can be an excellent choice for individuals and businesses as it offers enhanced withdrawal flexibility.

• It eliminates the need for the account holders to break the entire Fixed Deposit and protects them from additional charges and penalties.

• Learn more about AU Small Finance Bank’s Sweep-In FD and apply for this highly advantageous product today.