Hybrid Deposits or Flexi Deposits or MULTI OPTION DEPOSIT SCHEME (MODS) :

These deposits are a combination of demand and fixed deposits, invented for meeting customer’s financial needs in a flexible manner. Many banks had introduced this new deposit product some years ago to attract the bulk deposits from individuals with high net- worth. The increasing competition and computerization of banking has facilitated the proliferation of this product in several other banks in the recent past. Banks have given their own brand names to such deposits e.g. Quantum Deposit Scheme of ICICI Bank, Multi Option Deposit Scheme (MODS) of SBI.

The flexi deposits show a fusion of demand and fixed deposits as reflected from the following features of the product:

– Only one savings/current account (Current Premium account or Savings Bank Premium a/c as already discussed above) is opened and the term deposits issued under the scheme are recorded only on the bank’s books as no term deposit receipts are issued to the customer. However, the term deposits issuance and payment particulars would be reflected in the statement of the savings/current account for customer’s information/record.

– Once the quantum of deposits in savings/current account crosses a pre-agreed level, such surplus amount is automatically transferred to the term deposit account of a pre-determined maturity (usually one- year) in the customer’s name for increasing the interest earning.

– In the event of a shortfall in the current/savings account, the cheques drawn on the account are honoured by automatically transferring back the required amount to the savings/current account from the fixed deposit account (reverse sweep). In such a case, the term deposit is broken and the amount of the reverse sweep earns lower interest rate due to the pre-mature payment of that portion of the term deposit. However, the remaining amount of the term deposit continues to earn the original interest rate.

Main Advantages of Flexi-Deposits to a Customer Are :

– Advantage of Convenience: The customer opens only one account (savings or current) under the scheme and need not come to the bank branch each time for opening term deposit accounts or for pre- paying/ breaking term deposit for meeting the shortfall in the savings /current account.

– Advantage of Higher Interest Earning: The customer earns higher interest on his surplus funds than is possible when he opens two separate accounts: savings and term deposits.

– Withdrawals through ATMs can also be conveniently made.

Exclusive Features:

– Complete Liquidity.

– Convenience of Overdraft.

– Earns a higher rate of interest on deposit, without the dilemma of locking it for a long period.

– At the time of need for funds, withdrawals can be made in units of Rs.1,000/- from the Deposits by issuing a cheque from Savings Bank Account or through overdraft facility from Current account.

– Flexibility in period of Term Deposit from 1 year to 5 years.