Introduction to Auto Sweep Fixed Deposit

In India, where families juggle between household expenses, EMIs, school fees, and saving for the future, leaving money idle in a savings account feels like a lost opportunity. Most savings accounts give only 2.5% to 3.5% interest, which hardly beats inflation. On the other hand, fixed deposits give around 6% to 7.5% interest but require locking money for a fixed period. What if you could get the higher returns of an FD while keeping the liquidity of a savings account? That’s where auto sweep fixed deposit comes into play.

What is Auto Sweep Fixed Deposit?

Auto sweep fixed deposit is a hybrid banking facility offered by most leading banks in India. It links your savings account (or current account) with a fixed deposit. When the balance in your savings account crosses a pre-set threshold, the excess amount is automatically transferred into a fixed deposit. This FD earns higher interest like a normal deposit. Whenever you need funds back, the bank automatically “sweeps out” the required amount from the FD to your savings account.

This means your money is always working hard—earning FD-like returns when not in use, and instantly available when you need it.

Different Names of Auto Sweep Facility in Indian Banks

Although the concept is the same, different banks market it under different names:

• SBI – Multi Option Deposit Scheme (MODS)

• HDFC Bank – Sweep-in Fixed Deposit

• ICICI Bank – Money Multiplier Facility

• Axis Bank – Encash 24 or Auto Fixed Deposit

• Kotak Mahindra Bank – ActivMoney

• IndusInd Bank – Indus Multiplier Max

• IDFC FIRST Bank – Sweep-in / Booster variants (threshold depends on account type)

How Auto Sweep Fixed Deposit Works in Practice

Imagine you maintain ₹1,20,000 in your savings account. You set the auto sweep threshold at ₹50,000 and the sweep unit at ₹10,000. This means:

• ₹50,000 remains in your savings account as liquidity.

• The excess ₹70,000 is converted into fixed deposits of ₹10,000 each.

• These deposits earn FD interest rates, say 6.75% per annum.

• Now, if you suddenly withdraw ₹40,000, the bank will break four FDs of ₹10,000 each in reverse order (last in, first out).

• You continue earning FD interest on the remaining swept-in funds.

This way, you never lose out on returns while enjoying full liquidity.

Bank-Wise Details of Auto Sweep Fixed Deposit

State Bank of India (SBI) – Multi Option Deposit Scheme (MODS)

SBI offers the Savings Plus Account linked to MODS.

• Threshold Balance: ₹35,000

• Resultant Balance: ₹25,000 (must remain in SB)

• Sweep Amount: Minimum ₹10,000, in multiples of ₹1,000

• Tenure: 1 to 5 years

• Interest Rate: Same as regular FD rates

MODS is extremely popular with SBI customers because it combines safety, FD returns, and liquidity.

HDFC Bank – Sweep-in Fixed Deposit

HDFC allows customers to link their savings or current account with an FD.

• Threshold Balance: Flexible, set by customer

• Sweep Amount: Minimum ₹25,000 in multiples of ₹5,000

• Resultant Balance: Decided by the account type

• Tenure: 1 year to 5 years (renewable)

When balance falls below threshold, the FD is broken in multiples of ₹5,000 (LIFO basis).

ICICI Bank – Money Multiplier Facility

ICICI calls its version “Money Multiplier.”

• Minimum Balance to create FD: ₹15,000

• Resultant Balance (protected): ₹10,000 (₹30,000 for certain premium accounts)

• Sweep Unit: ₹5,000 multiples

• Tenure: 1 year to 5 years

• Reverse Sweep: Triggered when SA drops below resultant balance

This is ideal for salaried professionals who want idle salary surplus to generate better returns.

Axis Bank – Encash 24 Flexi Deposit

Axis Bank’s facility works under Encash 24.

• Threshold: ₹25,000

• Sweep Multiples: ₹5,000

• Tenure: 6 months to 5 years

• Withdrawal: Automatic sweep-out without penalty

Encash 24 is widely used by business owners and young professionals.

Kotak Mahindra Bank – ActivMoney

Kotak’s ActivMoney is one of the most customer-friendly versions.

• Threshold Balance: ₹25,000

• Sweep Unit: ₹5,000 multiples

• FD Tenure: 180 days (default)

• Resultant Balance: ₹25,000 remains in savings account

ActivMoney is flexible and available with both savings and current accounts.

IndusInd Bank – Indus Multiplier Max

IndusInd offers Indus Multiplier Max also known as Smart Sweep.

• Threshold Balance: ₹20,000

• Sweep Multiples: ₹1,000

• Resultant Balance: ₹20,000 retained in savings account

• Withdrawal: Only exact required units are broken (no penalty)

This is one of the most flexible sweep facilities in India.

IDFC FIRST Bank – Sweep-in Facility

IDFC FIRST offers auto sweep in certain account variants.

• Threshold: Varies by product (Savings thresholds not published publicly; Current accounts list ₹2,00,000 / ₹50,000)

• Sweep Multiples: ₹1,000

• Tenure: 370 days (in some account types)

Since thresholds differ, customers should check their exact account variant in-app or at the branch.

Features of Auto Sweep Fixed Deposit

Higher Returns than Savings

Swept-in funds earn FD rates, usually double the SA rate.

Liquidity on Demand

Unlike normal FDs, there is no penalty on withdrawal.

Automatic Management

You don’t need to manually open or close deposits.

Flexible Thresholds

You can decide how much to keep in SA and how much gets swept.

Transparent Interest

Interest is credited quarterly or as per FD rules.

Benefits of Auto Sweep Fixed Deposit

• Idle money earns more without effort.

• No fear of insufficient funds—reverse sweep ensures payments clear.

• Peace of mind for salaried employees who receive lump sums.

• Short-term savings can be optimized instead of lying idle.

• Customizable thresholds suit every lifestyle.

Limitations of Auto Sweep Fixed Deposit

• Fully taxable interest (no exemption like SA ₹10,000 under 80TTA).

• Not ideal for low balance holders (you may not reach sweep threshold).

• Sweep multiples can mismatch with exact withdrawal need.

• Some banks offer slightly lower FD rates for sweep-in FDs compared to standalone FDs.

Auto Sweep Fixed Deposit vs Normal Fixed Deposit

Auto Sweep Fixed Deposit vs Savings Account

Taxation on Auto Sweep Fixed Deposit

Interest earned on auto sweep FD is taxed under “Income from Other Sources” as per your slab. TDS is deducted if annual FD interest exceeds ₹40,000 (₹50,000 for senior citizens). Unlike savings account interest, there is no ₹10,000 exemption.

Case Studies: Who Benefits Most?

Salaried Professional

Rohit, a software engineer, keeps ₹1 lakh idle in his SA every month. With auto sweep, his idle ₹70,000 earns 7% FD interest instead of 3%. Over a year, this gives him ₹2,800 extra.

Small Business Owner

Meena runs a boutique. Her account balance fluctuates between ₹50,000 and ₹3 lakh depending on sales. With auto sweep, excess automatically earns FD interest but remains available for vendor payments.

Senior Citizen

Mr. Sharma prefers liquidity but also wants better returns. Auto sweep gives him peace of mind—funds for medical emergencies plus FD returns on idle amounts.

Here are the official, up-to-date (as of Aug 19, 2025) auto-sweep (sweep-in / flexi FD) threshold limits and related details straight from each bank’s own site. I’ve focused on the trigger threshold (the balance level at/above which the excess is swept into FD) plus the sweep unit/multiples and the “resultant balance” (what stays in the savings a/c).

Snapshot: bank-wise thresholds & sweep rules (from official pages)

Strategies to Use Auto Sweep FD Optimally

• Set threshold wisely: Calculate average monthly expenses and keep that much in SA.

• Choose multiples carefully: Match sweep unit with spending habits.

• Track interest: Monitor statements to ensure earnings are optimized.

• Combine with long-term FDs: Use auto sweep for short-term idle money, and regular FDs for long-term goals.

• Tax planning: Keep track of TDS and include in ITR.

Auto Sweep FD vs Liquid Mutual Fund: Which Gives More Profit and Peace of Mind?

Understanding the Core Idea

An Auto Sweep Fixed Deposit (FD) automatically moves your idle savings account balance above a threshold into a fixed deposit, earning FD-like interest (usually 3–7% per annum, depending on the bank). It offers liquidity + fixed return security.

A Liquid Mutual Fund, on the other hand, invests in short-term debt instruments (treasury bills, government securities, corporate bonds, commercial papers) with slightly higher return potential (4–7.5% per annum) and same-day or T+1 day redemption.

At first glance, both seem like safe short-term parking spots for money, but the profit and mental peace angle makes a big difference.

Profit Generation: Numbers Speak Louder than Words

Let’s compare with a practical example (as of 2025 average rates):

Scenario: ₹5,00,000 kept for 1 year

• Auto Sweep FD (average 6% p.a.)

  • Interest earned = ₹30,000 (before tax)

  • Taxation: Interest is added to your income and taxed as per your slab. If you’re in 30% bracket, effective return ≈ 4.2% = ₹21,000 post-tax.

• Liquid Mutual Fund (average 6.75% p.a.)

  • Gain = ₹33,750

  • Taxation: If redeemed before 3 years, taxed as short-term capital gains at slab rate. After 3 years, you enjoy indexation benefits, lowering effective tax drastically.

  • If you’re in 30% bracket and redeem within 1 year: Net ≈ ₹23,625 post-tax.

✅ Result:

• Short-term holding: Both give similar net returns, liquid funds may edge slightly higher.

• Long-term holding: Liquid funds win due to indexation (effective returns often cross 5%+ post-tax).

Mental Peace Factor

• Auto Sweep FD:

  • Guaranteed returns, backed by the bank.

  • Instant liquidity—withdraw from your savings account anytime.

  • No market fluctuation risk.

  • Peace of mind is maximum for conservative savers.

  • But taxation hurts net profit, especially for higher income groups.

• Liquid Mutual Fund:

  • Returns can vary slightly but generally stay stable (not as volatile as equity).

  • Withdrawals are quick (T+1 redemption, some funds allow instant redemption up to ₹50,000/day).

  • Slight element of market risk—though very low.

  • Peace of mind is good for those who understand mutual funds, but for ultra-conservative investors, the word “market” may create anxiety.

The Balancing Act: Profit vs Peace

• If you are someone who says: “I don’t want to think, I just want safe growth of my idle funds.” → Auto Sweep FD is your friend.

• If you are someone who says: “I want slightly better returns and don’t mind understanding a basic mutual fund.” → Liquid Mutual Fund beats auto sweep over time.

When to Choose What?

• Auto Sweep FD → Best if:

  • You need instant liquidity without worrying about market terms.

  • You are in a lower tax slab (10–20%).

  • You want peace of mind above profit.

• Liquid Mutual Fund → Best if:

  • You are in a higher tax bracket (30%).

  • You can park money for 6–36 months.

  • You want better inflation-adjusted, post-tax returns.

Final Thought: The Middle-Class Dilemma

Middle-class savers always stand between fear of risk and hunger for returns. Auto sweep FD is like a caring mother who ensures your money is safe, while a liquid mutual fund is like a smart elder brother who manages money cleverly and brings more back home. Both live in the same house (your financial life), but knowing when to rely on which makes the real difference.

FAQs on Auto Sweep Fixed Deposit

Q1. What is auto sweep fixed deposit facility?
It is a facility where surplus funds from savings account automatically get converted into FDs.

Q2. What is the minimum threshold for auto sweep?
It varies—SBI ₹35,000, ICICI ₹15,000, Kotak ₹25,000, IndusInd ₹20,000, Axis ₹25,000.

Q3. Is interest taxable?
Yes, fully taxable like FD interest.

Q4. Can I withdraw anytime?
Yes, reverse sweep ensures instant liquidity.

Q5. Do all banks offer it?
Most leading banks offer under different names (MODS, Sweep-in, ActivMoney, etc.).

Q6. Does auto sweep affect CIBIL score?
No, it does not impact credit score.

Q7. Is it better than keeping idle money in savings account?
Absolutely, because you earn FD returns without losing liquidity.

Q8. Can NRIs use auto sweep facility?
Yes, but depends on bank and account type (NRE/NRO).

Q9. Is there a penalty on breaking sweep FD?
No, partial withdrawal is penalty-free.

Q10. Is auto sweep better than liquid mutual funds?
Auto sweep is safer and simpler but returns are usually slightly lower than liquid funds.

Conclusion

Auto sweep fixed deposit is one of the smartest facilities Indian banks offer but surprisingly many customers don’t activate it. By enabling it, you ensure your money never sits idle—earning fixed deposit returns while being as liquid as cash in savings account. Different banks have different thresholds and sweep multiples, but the essence is the same: a perfect blend of safety, liquidity, and better returns.

For middle-class families, senior citizens, professionals, and small businesses, it’s a silent wealth booster. So if you haven’t activated auto sweep on your savings account yet, now is the best time to make your idle money work harder for you.