Sweep-in Fixed Deposits combine the best of savings accounts and fixed deposits. With the sweep in the facility, you won’t have to worry about not having enough funds in your account for a transaction, and you won’t have to deal with the embarrassment of checks bouncing.When a cheque hits the account, if there are no sufficient funds in your savings account, the amount will be fetched from a sweep in FD. So, with this facility you can enjoy the FD interest rates and liquidity.Many banks offer this facility. Here is a look at features of the sweep-in FD as per the HDFC Bank website.
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What is Fixed Deposit sweep-in?
When you apply for the sweep-in facility, the bank divides the required FD into pieces of Rs. 1. It ensures that funds are available in your linked sweep-in Savings or Current Accounts. Cheques or any other debit transaction from your account will not be hampered by a lack of money in your Savings/Current Account. Only resident Indians, HUFs, private and public businesses, and others are eligible to use the facility.
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How does a sweep-in facility work?
For example, your Savings Account has a sweep-in feature that is linked to a Rs.10,000 FD.You issued a Rs7,000 cheque. However, there is only Rs.2,000 in the Savings Account. The bank will now withdraw the value of Rs.5,000 from the FD linked to your Savings Account and deposit it in your Savings Account. As a result, the check is accepted.
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Limitation on sweep in accounts
Some banks impose a maximum/minimum limit on the number of sweep-in FDs that can be opened. Sweep-ins and sweep-outs are not permitted at HDFC Bank for FDs worth more than or equal to Rs.5 crore but less than Rs.25 crore.Customers who want to use the sweep-in service for large ticket FDs may not be able to do so online and will be routed to the nearest bank office.
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How can you apply for a sweep-in facility?
NetBanking is the simplest way to apply for a sweep-in facility. For an HDFC Bank single account, for example, below is a step-by-step explanation on how to enable the sweep-in function.Step 1: Sign in to your NetBanking account.Step 2: Select ‘Fixed Deposit Sweep-in’ from the drop-down menu. Under the Fixed Deposit tab.Step 3: For the sweep-in, you must choose the Savings Account number and the FD number that you want to be linked.
