Do you have money sitting idle in your savings accounts? Savings accounts current give investors only 3.5% per annum. Most banks in India offer a hybrid between savings and fixed deposit accounts that can help you boost the returns on your savings accounts. These hybrid accounts known by different names in different banks but commonly referred to as Flexi-Deposit schemes by many banks, help you enjoy the high returns of a fixed deposit on surplus money in your savings account. Some banks also offer the flexibility of breaking a part of your fixed deposits without affecting the interest on the rest.

Consider these accounts instead of a simple savings account for to get liquidity benefits provided by savings accounts as well as high returns provided by fixed deposit accounts.

What are Flexi-Deposits? Accounts that provide the liquidity associated with savings accounts along with higher returns of fixed deposits on surplus funds.

How do they work? Typically these accounts require the depositor to open a savings account with a certain minimum balance. The depositor provides instructions to the bank to maintain a certain minimum balance in the account and to transfer any surplus money over this minimum balance into a Fixed Deposit account. Whenever the balance in the savings account goes below the stipulated minimum balance, funds will be transferred from the fixed deposit account in units of Rs. 1000 (or whatever amount is determined by the bank).

What’s the duration of the fixed deposit associated with Flexi-Deposits? The duration of the fixed deposit can be chosen by the depositor. The fixed deposit durations being offered depend on individual banks, but can range from 15 days to 5 years.

As an example, following are details of the Flexi-Deposit scheme from Union Bank of India:

• The depositor opens a Savings Bank Account with a minimum amount of Rs 10,000/- and will issue standing instructions to UBI to maintain a certain predetermined balance through out the tenure of the account and to transfer the surplus funds over and above the said limit to a Fixed Deposit Account in multiples of Rs 5,000/- with a minimum of Rs 5,000/- for a fixed maturity period.
• Whenever the outstanding balance in Savings Bank Account goes below the stipulated amount the gap will be bridged by transfer of required funds from depositor’s Fixed Deposit Account in multiples of Rs 1,000.

Flexi-Deposits are a necessary addition to anybody maintaining savings accounts in India helping deposits with higher returns on their money.

Which banks offer Flexi-Deposits?

Following is a list of banks that offer flexi-deposit accounts.

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