SBI raises auto sweep deposit threshold to Rs 50,000: Here’s what it means for investors

The State Bank of India (SBI) has revised its rules for auto sweep deposits, also known as the Multi Option Deposit Scheme (MODS). Effective September 1, 2025, the threshold balance in a savings account for triggering an auto sweep has been increased by Rs 15,000. Now, MODS will be created when the savings account balance exceeds Rs 50,000, compared to the earlier threshold of Rs 35,000.

Unlike regular fixed deposits (FDs), which require customers to provide instructions for creation and tenure, MODS are generated automatically. As soon as the balance in a savings account crosses the set threshold, the bank converts the surplus into term deposits without the need for separate approvals each time. This feature allows customers to maximize interest income on idle funds while retaining full liquidity.

How SBI’s auto sweep works

The essence of the MOD scheme is simple: surplus funds in a savings account are automatically transferred into a fixed deposit. If, later, the savings account balance falls short for payments or debits, SBI will initiate a reverse sweep, breaking the deposit partially or fully to cover the shortfall.

According to SBI, “The basic feature of the MOD scheme is to help customers earn higher interest on surplus funds, while ensuring access to liquidity when required.”

MOD accounts can be held individually, jointly, or even in the name of minors.

Each MOD has a minimum tenure of one year, though deposits can be broken earlier if required.

Interest on MODs is paid quarterly or compounded, and premature withdrawals attract a small penalty on the broken portion.

This mechanism ensures that customers enjoy the higher returns of an FD while keeping their funds accessible for day-to-day needs.

Key changes in SBI’s MOD rules

The latest circular from SBI introduced several important changes:

Threshold Limit Raised: From Rs 35,000 to Rs 50,000.

Minimum Balance After Sweep: From Rs 25,000 to Rs 35,000.

Minimum Deposit Amount: Increased from Rs 10,000 (in multiples of Rs 1,000) to Rs 15,000 (in multiples of Rs 5,000).

In practice, this means that customers must now maintain a larger savings account balance before their surplus gets converted into MOD deposits.

All about MOD accounts

Dynamic Deposits: Automatically created and broken depending on account balance.

Flexible Withdrawals: Partial or full withdrawals are possible, though premature breaking attracts a penalty.

Higher Returns: MODs earn the same rate of interest as normal FDs.

Tax Deducted at Source (TDS): Applicable on interest earned, similar to regular fixed deposits.

FIFO and LIFO Options: Customers can choose whether the earliest or the latest deposit should be broken first in case of withdrawals.

Senior Citizen Benefits: Senior citizens get the additional FD interest benefit, but this perk does not extend to super senior citizens (80 years and above).

Why it matters

SBI’s auto sweep deposits remain a useful middle ground between the low returns of a savings account and the rigidity of fixed deposits. By revising the threshold to Rs 50,000, SBI ensures that only meaningful surpluses are locked into MODs, making the scheme more streamlined.

For customers, it means greater interest earnings without compromising liquidity—a convenient tool to optimize idle funds. However, individuals must remain mindful of the higher threshold and plan their balances accordingly to fully benefit from the scheme.