Lets understand better with the below example:-
Day 1. A customer has Rs. 2,56,000 in his Super Chamatkarik Bachat Khata (Diamond). At the end of the day balance above Rs. 2,00,000 in multiple of 10,000 shall be transferred to 90 days fixed deposit. Thus Rs. 50,000 will be automatically transferred in 90 days fixed deposit. Balance in savings account shall be Rs. 206,000. Interest in savings account: 6.5% and Interest in 90 days fixed deposit: 9.25%
Day 2: A customer has again Rs. 2,95,000 in his Super Chamatkarik Bachat Khata (Diamond). At the end of the day balance above Rs. 2,00,00 in multiple of 10,000 shall be transferred to 90 days fixed deposit Balance in savings account : Rs. 2,05,000
Balance in fixed deposit (1st lot) : Rs. 50,000
Balance in fixed deposit (2nd lot) : Rs. 90,000
Day 3: Customer presents a cheque of Rs. 1,50,000 for payment. Customer has balance of Rs. 1,40,000 in his/her Fixed Deposit Account through Sweep In/Sweep Out and balance of Rs. 2,05,000 in his/her Savings Account. Minimum balance is Rs. 100,000 hence Available Balance will be Rs. 105,000. Fund shortage Rs. (150,000 – 105,000) i.e. Rs. 45,000. Now deficit of Rs. 45,000 will be withdrawn from last lot of fixed deposit. i.e. 90,000. We use Last in First Out (LIFO) method for FD premature. Customer shall not be eligible for higher interest rate in case fixed deposit premature before 90 days. However, customer shall be eligible for interest rate of savings account on such amount.