Hybrid Deposits

These deposits are a combination of demand and fixed deposits, for meeting customer’s financial needs in a flexible manner. Hence these are hybrid deposits or flexi-deposits.e.g. Quantum Deposit Scheme of ICICI Bank, t’4ulti 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 is opened and the term deposits issued under the scheme are linked to the account. Banks do not issue deposit receipts but issue a statement of deposits to the customer. The fixed deposits are linked to the savings or current account such that once balance in savings/current account cross a pre-agreed level, such surplus amount is automatically transferred to fixed deposit account of a pre-determined maturity (usually one year) in the customer’s name, for higher interest earning. Similarly if the cheque issued in the savings/current account exceeds the balance in the account, but less than the total in all the accounts, the fixed deposits are automatically closed and the money credited to the savings/current account such that the cheque is honoured. It is also possible to partially close the fixed deposit accounts.
Thus, the main advantages of the flexi-deposits to a customer are
• Advantage of convenience: The customer opens only ore 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.