A bank account with a Multi Option Deposit facility would make your account worthwhile. Find out how and why it’s so awesome!
A multi-option deposit is a type of facility you get when you open a bank account. It is one of the best add-on tools that smartly manage your funds.
The way it functions is quite amazing. Whenever there are surplus funds in your bank account, MOD lets your account create a fixed deposit account multiple times.
The system keeps on pushing funds to newly created FDs every week or every month without your intervention. At the end of the day, It lets you earn better interest than the Savings Bank rate.
The SB rates of almost all banks usually are low. You can say, it’s between 2 to 6 percent. Those banks which offer high SB rates are normally new to the market. SBI MOD interest rate is the prevailing FD rate which you can get on the Official website https://bank.sbi
They require funds from the public and so do their rates are high. You should know that high returns come with higher risks.
What is SBI Multi Option Deposit?
Multi Option deposit is a kind of tool that allows you to earn better returns than the savings Bank rate. It is a combination of a Savings Bank or Current Account with Fixed Deposits (TDR or STDR).
How it works is quite simple. Under the scheme, the bank set a certain limit in your account called threshold balance. When you have excess funds more than this balance. The system sweeps the excess funds to the newly created fixed deposit account.
This auto-sweep usually happens with a minimum sweep amount of ₹10000 in multiple of ₹1000. That means the excess fund will be transferred as rounded figures in thousand.
Are You Eligible For MOD?
Yes, you must be thinking about whether you can have it or not. Actually, eligibility criteria are not much. As per the SBI website, it is mentioned that nearly all categories of customers can avail of the MOD facility.
Find out if you are under these categories. If you are! You can open an SBI MOD account.
- Account in Single or Joint names. (Both Savings Bank and Current Accounts).
- HUF-Hindu Undivided Family, Karta can open it. Karta is the head of HUF who decides and operates accounts in favour of HUF.
- Minor accounts but investors must follow the terms and conditions of saving funds in minor accounts.
- Companies, government organizations, and local bodies such as societies and accounts of associations, etc.
- Small business firm under proprietorship or partnership account.
The Features of MOD.
SBI Multi Option Deposits allow your bank account to create multiple internal Fixed Deposit accounts at a regular intervals of time.
It may be weekly, monthly, or quarterly. You have to advise your bank about the auto-sweep cycle. Monthly makes quite comfortable and it’s the most common auto-sweep cycle people favour.
Likewise, there are a number of features which is worth knowing. The same has been listed below:
- MOD is a combination of savings or current accounts with fixed deposits that enables you to earn better returns.
- The tenor of FDs is 1 to 5 years.
- It’s taxable and the amount which goes to FD is subjected to TDS.
- FD rates at the prevailing rates are applicable to MOD. The interest rate will be in the range of 6.5 to 7.5 percent per annum.
- The auto-sweep facility is available. Conversion of your funds to FD is fully automated. The system takes care of it.
- In order to have an auto-sweep facility, you have to have a threshold balance of ₹35000 and a resultant balance of ₹25000, where the minimum sweep amount would be ₹10000 in multiple of ₹1000.
- You can also get stand-alone MOD where the minimum sweep amount is ₹10000 in multiple of ₹1000 irrespective of threshold balance. You can do this online through the bank’s internet banking.
Advantages of MOD.
There are multiple advantages to using or activating the MOD facility in an SBI bank account. We can sum up these advantages or benefits of multi-option deposit as follows:
| Serial No. | Advantages of MOD |
| 1 | It’s easy to understand and execute. If you want better earnings without taking a risk, MOD would surprise you for sure. |
| 2 | MOD keeps on adding value to your idle money by creating a pool of multiple FDs. |
| 3 | It gets you FD rates on your savings Bank account without you doing anything. Each time when MOD executes an auto-sweep, the amount will create goes to a new FD at the prevailing FD rates. |
| 4 | All domestic savings Bank account holders can use the facility. It includes single as well as joint accounts. |
| 5 | MOD balance in your account is withdrawable. The pay-out amount will be in multiples of ₹1000 and you can withdraw anytime you need. |
| 6 | To save your interest earn, the break-out of MODs will be last-in-first-out. |
| 7 | You can discontinue the facility at any time you wish. When you put a transaction in your savings bank account using all the MOD balances, FDs will close automatically. |
| 8 | As per the product feature listed on the official website. It’s not seen the availability of loans against the FD created out of the MOD auto-sweep facility. But we have tested it and found it can get you a loan. There will be a lien marked in the FD account and the amount cannot be withdrawn till the loan is repaid. The interest rate is usually 1 percent above the FD rate. |
| 9 | The FD accounts are transferable from one branch to another. |
| 10 | A nomination facility is available in these accounts. |
Disadvantages of MOD.
A few of the downsides of MOD are worth knowing it. Though MOD in a bank account is totally safe and secure on one hand. On the other hand, you should also know the following drawbacks of multi-option deposits.
| Serial No. | Disadvantages of MOD |
| 1 | The funds in a multi-option deposit are taxable. Taxation in the MOD account is the same as that of a normal fixed deposit account. When large amounts of funds are being swept to internal FD accounts, TDS is deductible. So, it’s definitely not suitable if you are looking for tax benefit schemes. |
| 2 | Though it gets you higher rates than savings Bank rates, the earning capacity of your fund is limited to FD rates. The same amount invested in mutual funds with proper guidance would give you better results. |
| 3 | When multiple FDs are created, it becomes quite messy in handling these accounts. Though for income tax filing, the bank provides an interest certificate as per your primary account. Comparing those interest pay-out would take you at least 30 to 40 minutes to wind up. |
| 4 | There is no auto-renewal facility available in FD created through MOD. |
| 5 | Pre-mature closing of the account may attract a penalty. |
| 6 | The facility is meant for those who have a regular source of income. Therefore, this product is somewhat centred on a limited group of people only. |
MOD Account Opening Process.
We have seen that popular bank such as State Bank of India has certain types of Bank account in which the product is coded with MOD facility.
These can be account such as Salary Package account– Including State Government, Central Government, and other Corporates which has a tie-up arrangement with the Bank.
These accounts are already mapped with the multi-option deposit facility. So, if you are using it, there’s no need to register again.
Though you might want to check the status. If auto-sweep is not happening in your account, you might consider contacting the Bank and resolving the issue so that your idle fund starts earning better returns.
When you already have a Bank account, to avail of the facility, follow this guide. You might be able to use it in a simple way.
- Multi Option Deposit can be opened online as well as offline. Online mode is available on the bank’s internet banking and you can visit the bank to do it offline.
- Online Mode:
- Log in to your internet banking and see for e-Deposit on the main menu.
- Click on it and select the menu for opening Multi Option Deposits.
- From there you proceed accordingly.
- Offline Mode:
- Visit the bank and fill out the request or application form to set MOD in your account.
- Provide the account number for which you want to have the auto-sweep facility.
- Provide the frequency cycle for auto-sweep.
- Submit to the concerned staff. Check your account when the next cycle comes. You would see multiple FDs being created with the MOD tags.
- Stand-Alone MOD
- Stand-alone MOD is the one you create through internet banking. There is no auto-sweeping in this type of MODs.
- To do stand-alone MOD,
- Login to SBI internet banking.
- Go to e-Deposit.
- Select Open Multi Option Deposit.
- Next, you have to select the account number, and tenor of FD and select either TDR/STDR.
- Confirm it and your MOD will be done. One good thing is you can select interest pay-out.
SBI Bank Account with Inbuilt MODs.
Yes, it’s true that some of the SBI Bank accounts have inbuilt multi-option deposits mapped with them.
These accounts are salary package accounts and savings plus accounts. Earlier there was a bank account named Yuva. It seems to be discontinued. If you are using one of these SBI accounts, you might get better deals than others.
Most of the time, we are using normal Savings Bank account with the usual banking facilities. MOD is not intact with this account.
If you are interested in using the facility, you have to enrol either online or offline.
MOD Balance.
When you have an auto-sweep facility active in your Bank account. The system keeps on producing an endless number of FD accounts.
Ultimately, there will be times when checking and balancing these internal fixed deposit accounts would be difficult and messy.
Actually getting up-to-date figures of MOD balance is not that difficult. Things get messy when you need to ascertain certain transactions.
Doing transactions when you have a low balance in the primary account may lead to breaking your MOD balance. Though, the amount will break out from the latest FD created. When multiple transactions are done, you might get confused sometime.
To Check MOD Balance You Do This:
- Update your account passbook, you might see the account balance as Cleared balance and MOD balance.
- Cleared balance is the actual balance in your primary Bank account.
- MOD balance, as you know, would be the total FD amount created via the MOD auto-sweep facility.
- An alternate way of checking MOD balance would be using online internet banking.
- Under the SBI YONO application, Go to my account section and you might find all your FD accounts tagged with MOD.
- If nothing works out, you have to rely on Bank. Visit any branch with your passbook and let them pull out the details for you.
Tips on Maintaining SBI MOD account.
Of course, a multi-option deposit scheme will let you earn much better returns than keeping idle money in a Bank account.
But these account needs proper maintenance to avoid confusion in the future. Here are some of the best tips that could ease maintaining it.
- Using SBI Internet Banking on the YONO platform might give you better access to your bank account. It would be easy for you to keep a tap on MODs.
- Keeping archival of account statements would give better insight into past transactions related to MOD transactions.
- Update your passbook at regular intervals.
- Internet banking enables you to download statements of account when the need arises. That can be for the calculation of TDS deducted from each FD.
