The State Bank of India (SBI) offers a unique term deposit solution called the Multi Option Deposit Scheme (MODS), catering to individuals who seek flexibility, liquidity, and higher interest rates. Unlike conventional term deposits, MODS allow partial withdrawals while retaining the benefits of a fixed deposit. Here is a detailed overview of this innovative deposit scheme:
What is SBI Multi Option Deposit Scheme (MODS)?
The SBI MODS are term deposits linked to a Savings or Current Account. These deposits offer the advantage of partial withdrawals in multiples of ₹1,000 based on fund requirements, ensuring liquidity while earning the applicable term deposit interest rates. The remaining balance in the MODS account continues to earn interest at the rate applicable at the time of the initial deposit.
Key Features of SBI Multi Option Deposit Scheme
- Linked Accounts: MODS are linked to Savings Bank or Current Accounts, providing seamless access to funds whenever needed.
- Partial Withdrawals: Unlike traditional term deposits, you can withdraw funds in multiples of ₹1,000, as often as required, without breaking the entire deposit. Withdrawals can be made through cheques, ATMs, or internet banking.
- Flexible Tenure: The deposit tenure ranges from 1 year to 5 years, catering to various financial goals.
- TDS Applicability: Tax Deducted at Source (TDS) is applicable at the prevailing rates, ensuring compliance with tax regulations.
- Nomination Facility: Account holders can nominate a beneficiary to secure the deposited funds.
- Auto-Sweep Facility:
- Savings Plus Accounts can avail the auto-sweep facility when the account balance exceeds the Minimum Threshold Balance of ₹35,000.
- A Minimum Resultant Balance of ₹25,000 must be maintained in the linked Savings Plus account.
- The Minimum Sweep Amount is ₹10,000, in multiples of ₹1,000.
- Stand-alone MODs:
- MODS accounts can also be opened independently without the auto-sweep facility.
- The minimum deposit amount for opening a stand-alone MOD or e-MOD account is ₹10,000.
- Senior Citizens Benefits: Senior citizens enjoy additional interest rates, making this scheme particularly attractive for retirees.
- AMB Requirement: The linked Savings or Current Accounts must maintain the Average Monthly Balance (AMB) to avoid penalties.
Benefits of SBI Multi Option Deposit Scheme
- Liquidity: The ability to withdraw in multiples of ₹1,000 ensures access to funds without disrupting the entire deposit.
- Higher Returns: Retaining the remaining balance in the deposit allows it to continue earning term deposit interest rates.
- Convenience: Multiple withdrawal options, including cheques, ATMs, and online banking, make accessing funds hassle-free.
- Flexibility: The auto-sweep feature efficiently manages surplus funds, ensuring optimal returns while maintaining liquidity.
- Senior Citizen Advantage: Additional interest rates provide higher returns for senior citizens.
Considerations Before Opting for MODS
- TDS Impact: The interest earned on MODS is subject to TDS as per the applicable tax laws. Customers should plan their investments accordingly to avoid surprises.
- AMB Compliance: The linked Savings or Current Accounts require compliance with AMB rules. Failure to maintain the AMB could result in penalties.
- Threshold Limits for Auto-Sweep: Customers opting for the auto-sweep facility must ensure adherence to the minimum threshold and resultant balance requirements.
Who Should Opt for MODS?
SBI’s Multi Option Deposit Scheme is ideal for:
- Individuals Seeking Liquidity: Those who may need to access funds at short notice while keeping their savings intact.
- Senior Citizens: Retirees who want a combination of fixed income and easy access to their money.
- Savings Plus Account Holders: Customers looking to optimize their surplus savings through the auto-sweep feature.
- Tax-Conscious Investors: Individuals who prefer deposits with TDS compliance for transparency and tax planning.
How to Open an SBI MODS Account?
- Visit your nearest SBI branch or log in to your internet banking account.
- For auto-sweep MODS, ensure your Savings Plus account meets the threshold and resultant balance requirements.
- For stand-alone MODS, deposit a minimum of ₹10,000.
- Complete the required documentation and nominate a beneficiary, if desired.
Conclusion
The SBI Multi Option Deposit Scheme (MODS) is a versatile and customer-centric deposit solution that offers the best of both worlds: liquidity and higher returns. Its unique features like partial withdrawal, auto-sweep facility, and additional interest rates for senior citizens make it an excellent choice for various financial needs. Whether you are saving for short-term goals or seeking a secure investment avenue, MODS is worth considering.
For more information or to open an MODS account, visit your nearest SBI branch or explore the options on SBI’s online banking platform.
Frequently Asked Questions (FAQ) about SBI Multi Option Deposit Scheme (MODS)
1. What is the minimum and maximum tenure for the MODS scheme?
- The minimum tenure for the MODS scheme is 1 year, and the maximum tenure is 5 years.
2. Can I make partial withdrawals from my MODS deposit?
- Yes, you can make partial withdrawals in multiples of ₹1,000 without liquidating the entire deposit.
3. Are the interest rates for MODS fixed or variable?
- The interest rates for MODS are fixed at the time of the initial deposit and remain the same throughout the tenure.
4. Who is eligible to open an MODS account?
- The MODS scheme is available to resident individuals, NRIs, HUFs, companies, and other entities.
5. Can I avail a loan against my MODS deposit?
- Yes, you can avail a loan against the balance in your MODS account, providing an additional financial cushion.
6. Is there a nomination facility available for MODS?
- Yes, you can nominate a person to claim the deposit in case of any unforeseen circumstances.
7. What are the tax implications of the MODS scheme?
- TDS is applicable if the interest earned on your MODS deposit exceeds ₹10,000 in a financial year.
8. How do I open an MODS account?
- You can open an MODS account by visiting your nearest SBI branch or through the SBI online banking portal.
9. Is there any penalty for premature withdrawal?
- Premature withdrawal is allowed, but it may attract a penalty as per the bank’s terms and conditions.
10. Can NRIs invest in the MODS scheme?
- Yes, NRIs are eligible to invest in the MODS scheme.
