The reason for considering the mode of liquidation is that many a times, the liquidation process leads to breaking of a FD which one did not want to be broken and which would have earned better returns later. So the customer might end up losing money this way.
The best mode of liquidation is to first liquidate the FD with lowest interest rates.
3.Pre closure penalty: Some banks also charge pre closure penalty on breaking FDs before time. This also needs to be kept into consideration.
Since the FD is linked to the savings account so fluctuations in the savings account balance will lead to FDs getting broken thus incurring pre closure penalty. This way the customer may end up losing more money than gaining via this facility.
List of some banks offering this facility
IDBI Bank - Sweep In Savings Account
Axis Bank - Encash 24
Union Bank of India - Union Flexi Deposit
HDFC Bank - Super Saver Facility
Bank of India - BOI Savings Plus Scheme
State Bank of India - Multi Option Deposit Scheme