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

If you want to earn good return on your lied amount in bank but at the same time you need high liquidity, then the auto sweep facility is for you. It offers you return and you can withdraw the amount easily whenever you want.  

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 transfer 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. And when  amount in your savings account go below than a minimum limit, then auto sweep transfer fund from fixed deposit account to your savings account to maintain the minimum limit. It helps the average interest on the excess funds grow faster than the interest earned from savings accounts, and provides liquidity to account holders.

How does the auto sweep facility work? 

First, you need to specify a threshold limit on your savings account. When the money in the account exceeds this threshold limit, the excess amount will automatically be transferred to your fixed deposit account. This procedure is referred to as sweep-in. Remember that both these accounts will receive their interest earnings. 

But, it does not mean you cannot withdraw the excess amount. In other words, a sweep-in facility does not result in a loss of liquidity of the amount transferred. Suppose you request for an amount exceeding the threshold limit from your savings account. The amount will get transferred from your FD account to your savings account. 

Let us understand this better with an example. 

Suppose you have opened a savings account with an auto sweep facility, and the minimum balance required is Rs.10,000. You deposit Rs.30,000 and set a threshold limit of Rs. 15,000.  In this case, the excess amount, Rs.15,000, will get transferred to your FD account. Both accounts will accrue interest. 

If you make a reverse sweep of Rs.5000, the FD interest rate will apply only for the remaining Rs.10,000 in the FD 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 at the State Bank of India, 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: The screen will display an interface. You must enter auto sweep details, including sweep cycle (monthly or weekly), start date, threshold amount and resultant balance. 

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. 

Please note that 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: 

• Bank of India
• Bank of Maharashtra
• State Bank of India 
• HDFC Bank 
• ICICI Bank 

Benefits of auto sweep facility

Discussed below are some benefits of the auto sweep facility: 

• Provides liquidity 

You'll receive the benefit of liquidity and a chance to earn a higher interest rate on your funds. For instance, suppose you have an EMI pending and don’t have enough funds in your savings account. Your bank will transfer the funds invested earlier to your fixed deposit account to facilitate timely repayment. 

• Flexibility of linking multiple accounts

You will get the benefit of choosing the tenure, maturity period and threshold amount of your FD. This feature allows you to link multiple accounts to the fixed deposit account. It ensures you never face a liquidity crunch. 

• Helps to build a separate corpus 

You can use the auto sweep facility to build a separate corpus which you can dip into during emergencies. This will ensure you don’t have to take any loans to deal with cash crunches. 

Disadvantages of auto sweep facility

Check these disadvantages of the auto sweep facility below: 

• Additional fees 

Additional charges may be applicable if you avail of the auto sweep facility. You should check the fees required before incorporating this banking feature. 

• Penalties 

Penalties will be applicable for premature withdrawal of funds. So, it is advisable not to withdraw funds from an auto sweep account before the maturity of a sweep cycle. 

Final words 

Auto sweep facility is a beneficial banking feature which helps account holders to grow their funds and maintain liquidity and flexibility. So, instead of keeping your excess funds lying idle in a savings account, consider incorporating the auto sweep facility to grow your corpus.