Wednesday, November 10, 2010

Good deal for fixed deposit

I was surfing blogs recently when Singapore Blue Chips (I call him sbc for short) made a very interesting post. It's regarding this bank, ICICI bank, that is giving a very good interest rates for its fixed deposit account with them. ICICI bank has only one branch in Singapore at Raffle Quay and is one of the newest foreign bank setting up shop locally.

I was checking casually, not 2 weeks ago, when I was trying to see if there's anything to recommend to my parents. They are not investors and savings plans for them is a joke at this point in time. For short term, almost risk free, good returns only. As I was checking out the different banks, I realised that the local banks are giving us a pittance for the sum of money deposited in their banks. Here's a breakdown for a sum of  100k, SGD denominated, 3 yrs maturity period, fixed deposit by the various banks (dated 8-Nov-2010):

UOB: 0.7% pa

DBS: 0.7% pa (their website did not have the data for 3 yrs, so the rates are for 2 yrs)

OCBC: 0.7% pa

HSBC: 0.45% pa (their website did not have the data for 3 yrs, so the rates are for 1 yr)

Standard chartered: 0.75% pa (for 60 months, it's 1.10% pa)

Citibank 0.45% pa

May bank: 1.15% pa

You can see how pathetic the options are for fixed deposit. It really pays to shop around rather than think that they are all the same everywhere. You can get a huge range of interest rates just by shopping around. So, imagine the shock I had when I read the post by SBC regarding the interest rates offered by ICICI bank. Take a look:

It's frakking 2.20% pa - twice as much as the highest rate given by the whole list given to you earlier. At 2.20% pa, it even beats the SIA bonds offered to the retailer not too long ago. That has a maturity of 5 yrs, given a return of 2.15% pa. It's a very good deal, in my opinion. So, if you have spare cash that you can't put anywhere, you might want to consider putting it into ICICI bank for 3 years. It's as safe as local banks because it's guaranteed by the same act that governs the deposits in Singapore. Might want to check out what's the guaranteed amount though, that is due to change by end of this year, I believe.