Why ULIP mis-selling has become rampant ?
Why is there so much mis-selling of ULIP? How to avoid this mis-selling? Who should take ULIP?
Most of us have to maintain a monthly minimum balance in our savings account. Public sector banks and private lenders both penalise customers if they do not maintain the stipulated minimum balance. However, the limit varies from bank to bank. Generally, public sector banks set the limit between Rs 1,000 and Rs 5,000 depending on the category of the branch. On the other hand, private lenders set up the minimum balance limit between Rs 5,000 and Rs 25,000 depending on the nature of the account.
Reverse sweep facility
ICICI Bank is offering a unique feature for its customers. One can link multiple fixed deposits to a savings account and at any point of time if the savings accounts balance falls below the minimum amount, a part of fixed deposit amount is automatically credited to the savings account to restore the balance above the floor level.
In ICICI Bank, the average monthly balance limit is set at Rs 10,000. So, when the savings account balance falls below Rs 10,000, the an amount would be deducted from an FD and would be credited to the savings account, thereby restoring the minimum balance.
Under the reverse sweep feature, a linked fixed deposit is automatically broken and the money is moved to the Resident Savings Account. This amount can be used to meet any financial shortfall in the account.
Features
All linked fixed deposits will be enabled for automatic reverse sweep facility in multiples of Rs 5,000 on a Last-In-First-Out basis when the balance in the savings account falls below Rs.10,000, as this is set as minimum monthly balance for savings account by ICICI Bank.
The amount of reverse sweep will earn interest rates at the applicable rate for the period that the fixed deposit was held with the bank less applicable premature withdrawal penalty. The remaining amount will continue to earn higher interest at the original rate applicable to the fixed deposit.
For example, if any account is short of Rs 1,000 then this amount will come from the latest FD, in case of multiple FDs. If the original FD amount was Rs 5,000, the rest of the FD (Rs 4,000 in this case) would continue to earn interest of the FD.
Important points
The Money Multiplier feature gives a person the liquidity of a savings account coupled with the returns of a fixed deposit.
Anyone above 18 years of age can get the benefit of this plan. The maximum tenure of the FDs that can be linked to a savings account for this reverse sweep benefit is 18 months.
On the other hand, any individual who wishes to delink their savings account and the FD should send a request for the same, by contacting ICICI Bank through phone banking or by visiting the home branch.