What is Auto Sweep Facility? Banks List, How to Activate & Benefits

An auto sweep facility is a smart banking feature that links your savings account to a fixed deposit. It allows surplus funds to automatically earn higher interest while maintaining liquidity. When your savings balance exceeds a set threshold, the excess is transferred to an FD, and funds are swept back in when needed, offering both returns and flexibility.

Many banks offer this feature, such as the auto sweep facility in SBI, to maximise returns on idle balances.

Key Highlights

• Auto sweep facility links your savings account to a fixed deposit for higher returns.
• Excess balance is automatically transferred to FD; money is swept back when needed.
• Provides higher interest like FD while maintaining liquidity of a savings account.
• Banks offering auto sweep include SBI, HDFC, ICICI, Bank of India, and others.
• Auto sweep facility in SBI can be activated through SBI Net Banking or YONO.

What is an Auto Sweep Facility? 

This banking feature links your savings account to your fixed deposit account, which helps you earn higher interest rates on the extra idle money lying in your savings accounts. As is implied by the phrase ‘auto sweep’, this feature transfers extra funds lying in the savings account to your fixed deposit account. 

All you need to do is connect your savings and fixed deposit accounts and set up a monetary limit.

• When the balance in the savings account exceeds the set limit, the auto sweep facility will start functioning. 
• The excess amount will get transferred to the fixed deposit account. 
• When the amount in your savings account goes below the minimum limit, then auto sweep transfer fund from fixed deposit account to your savings account to maintain the minimum limit. 
• This helps the average interest on the excess funds grow faster than the interest earned from savings accounts, and provides liquidity to account holders.

If you want to earn higher returns on idle funds while maintaining liquidity, the auto sweep facility can be a suitable option. 

How does the Auto Sweep Facility Work? 

The auto sweep facility automatically transfers surplus funds between a savings account and a linked fixed deposit based on a predefined threshold balance. This allows idle funds to earn higher interest while ensuring sufficient liquidity for day-to-day transactions.

The auto sweep process works as follows:

• Set a threshold balance for the savings account.
• When the account balance exceeds the threshold, the surplus amount is automatically transferred to the linked fixed deposit. This is known as sweep-out.
• The savings account continues to earn savings account interest, while the transferred amount earns the applicable fixed deposit interest.
• If the savings account balance falls below the required amount during a withdrawal or payment, the required funds are automatically transferred back from the fixed deposit. This is known as sweep-in.
• Only the required amount is swept back into the savings account, while the remaining balance continues to earn fixed deposit interest.

Let us understand this better with an example

Suppose your savings account is linked to an auto sweep facility with a threshold balance of ₹50,000. If your account balance increases to ₹60,000, the surplus amount above the threshold is automatically transferred to the linked fixed deposit. If you later need additional funds, the required amount is automatically swept back from the fixed deposit to your savings account.

How to Activate the Auto Sweep Facility? 

The steps to activate the auto sweep facility at banks are more or less the same. Here, we have provided the steps to activate the auto sweep facility in SBI, India’s largest lender: 

Step 1: Visit the official online banking portal of SBI. Provide the internet banking details such as username and password. Insert the captcha code and One Time Password (OTP), which you will receive on your registered mobile number. 

Step 2: Once redirected, navigate to the ‘Deposit and Investment’ option located at the top of the screen and click on it. Select the ‘Deposit’ option. 

Step 3: You’ll be redirected to a screen where you need to select the ‘Auto Sweep Facility’ option. 

Step 4: You’ll again be redirected to a screen where the bank account details, including account number and address, will be displayed. Click the ‘Continue’ button. 

Step 5: You will receive a high-security password on your registered mobile number. Enter the password in the designated box and click the 'Confirm' button. 

Step 6: Enter the required auto sweep details, such as the threshold amount and resultant balance, and submit the request.

It is to be noted that when funds in the savings account reach the threshold amount, the auto sweep feature will start operating. The resultant amount is the amount which will remain in the savings account. 

Note: These steps may differ based on the internal banking portal of your respective bank. 

Auto Sweep Facility Banks List

Here are some of the banks offering auto sweep facility: 

Benefits of Auto Sweep Facility

The auto sweep facility helps maximise returns on surplus funds while ensuring easy access to money whenever required. Some of its key benefits are:

• Higher returns: Surplus funds automatically earn fixed deposit interest instead of regular savings account interest.
• Automatic liquidity: Funds are swept back from the linked FD whenever required, ensuring uninterrupted transactions.
• No manual transfers: Excess balance is automatically moved to the fixed deposit without any manual intervention.
• Flexible access to funds: Only the required amount is swept back from the fixed deposit, while the remaining balance continues to earn FD interest.
• Better utilisation of idle funds: Helps maximise returns on surplus money without locking it away completely.

Disadvantages of Auto Sweep Facility

Despite its benefits, the auto sweep facility has certain limitations that account holders should be aware of:

• Minimum balance requirement: The auto sweep facility is triggered only after the specified threshold balance is reached.
• Bank-specific terms: Threshold limits, sweep amounts, deposit tenure and eligibility vary across banks.
• Premature withdrawal impact: If funds are swept back before maturity, the withdrawn portion may earn interest at the applicable premature withdrawal rate, while the remaining deposit continues to earn the original FD interest rate.
• Limited availability: The facility is available only on eligible savings accounts and may not be offered across all account types.

Final Word 

The auto sweep facility is ideal for earning higher returns without losing liquidity. By automating transfers between savings and fixed deposits, it helps customers grow unused funds effortlessly. If you want both flexibility and better interest, activating the auto sweep facility in SBI or any major bank can be a smart financial move.