Is this safe?


eedwinn

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May 20, 2009
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#1
My parents are planning to put fixed deposit with this bank because of the attractive interest rates. From what I've know its a bank from India.

http://www.icicibank.com.sg/index.html

However, I know nuts about banking and have not heard of them before. Anyone knows if this kind of banks are relatively safe as compared to the usual personal banks like POSB etc.?
 

kwttan

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#2
There are quite a few banks in Singapore besides POSB, namely UOB, OCBC, Standard Chartered, HSBC, Citibank, etc... Believe most have their own website, just go and search.
 

night86mare

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#3
My parents are planning to put fixed deposit with this bank because of the attractive interest rates. From what I've know its a bank from India.

http://www.icicibank.com.sg/index.html

However, I know nuts about banking and have not heard of them before. Anyone knows if this kind of banks are relatively safe as compared to the usual personal banks like POSB etc.?
you are exposing yourself to currency risk, that might explain the favourable rates.

let's put it this way, if let's say... 1 sgd = 5 alien currency, singapore banks give 1% interest rate. your 1sgd become 1.01 sgd after a year.

if at this point in time, alien bank gives 10% interest rate, but at the end of the year, alien currency cui, become 1 sgd = 20 alien currency... so your 5 alien currency become 5.5 alien currency, but less than 0.25 sgd.

hope this explains it. this is without taking into account whether the bank is safe or not.
 

hongsien

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#4
you are exposing yourself to currency risk, that might explain the favourable rates.

let's put it this way, if let's say... 1 sgd = 5 alien currency, singapore banks give 1% interest rate. your 1sgd become 1.01 sgd after a year.

if at this point in time, alien bank gives 10% interest rate, but at the end of the year, alien currency cui, become 1 sgd = 20 alien currency... so your 5 alien currency become 5.5 alien currency, but less than 0.25 sgd.

hope this explains it. this is without taking into account whether the bank is safe or not.
It is not an 'alien' bank as all banks in Singapore have to be a local registered company, anyway, ICICI is a big bank in India. The different rates are given for different currencies........

All banks in Singapore have these kinds of deposits with different rates per currency.......

What you need to check is if you can withdraw the deposit at any time

A deposit in a foreign currency can be high, BUT if that currency falls in exchange rate value more than the given interest, you are basically losing money........unless you have a 'feeling' that a certain currency will increase in value in a medium range of period

You also have to include the exchange rate difference (between buying and selling to the bank) into the loss when you withdraw your deposit.......
 

eedwinn

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May 20, 2009
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#5
Thanks for all the replies.

In other words, the bank will convert the SGD which I deposit to Rupees?

So does that mean that if I deposit say SGD$20,000 with a promised rate of 1.45% for 12 months, it does not mean that I will be able to withdraw (20,000 *1.0145) $20,290 when it matures, taking into account that there is a exchange difference?
 

whizzard

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#6
Thanks for all the replies.

In other words, the bank will convert the SGD which I deposit to Rupees?

So does that mean that if I deposit say SGD$20,000 with a promised rate of 1.45% for 12 months, it does not mean that I will be able to withdraw (20,000 *1.0145) $20,290 when it matures, taking into account that there is a exchange difference?
Yes, the bank will convert your SGD to Rupees. Say you deposit S$10,000 today and the exchange rate is 33.88, you will get INR338,800 in your account.

At the end of 12 months at the interest rate of 1.45%, you will get back INR343,713 (338,800 x 1.0145).

Now, if the exchange rate at the end of 12 months is 35.00, your INR343,713 will be worth S$9,820. Conversely, if the exchange rate moves to 31.00 at the end of 12 months, your Rupee will be worth S$11,087.

What you are doing is taking the exchange rate risk in return for higher interest rate paid on Rupees vs what you can get on the SGD.
 

Noakram

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#7
sorry, I can't help but to say this .....

Looking at the bank's name, I really no confidence .... icici sounds like ai see ai see .... going to die like dat.
 

GRbenji

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May 24, 2010
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you are exposing yourself to currency risk, that might explain the favourable rates.

let's put it this way, if let's say... 1 sgd = 5 alien currency, singapore banks give 1% interest rate. your 1sgd become 1.01 sgd after a year.

if at this point in time, alien bank gives 10% interest rate, but at the end of the year, alien currency cui, become 1 sgd = 20 alien currency... so your 5 alien currency become 5.5 alien currency, but less than 0.25 sgd.

hope this explains it. this is without taking into account whether the bank is safe or not.
How come got forex risk when TS is doing S$ FD? The 12mth 1.4%pa is S$ FD.;)

And all banks operating in sg must be under the Deposit Insurance Scheme. So if FD amount is below the amount stated in the DIS, then it's full covered.
 

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night86mare

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#9
It is not an 'alien' bank as all banks in Singapore have to be a local registered company, anyway, ICICI is a big bank in India. The different rates are given for different currencies........
just giving an example, alien currency can suka put numbers.
 

night86mare

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#10
How come got forex risk when TS is doing S$ FD? The 12mth 1.4%pa is S$ FD.;)

And all banks operating in sg must be under the Deposit Insurance Scheme. So if FD amount is below the amount stated in the DIS, then it's full covered.
ah, i never read his link, i thought he was talking about some random india bank he found online. :)
 

Rashkae

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Nov 28, 2005
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1.45% is quite low. HSBC and Standard chartered offer much better rates.
 

Sep 4, 2010
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Sorry to say, but everytime you make a currency transaction, they (the bankers or the money exchange people) earn. They earn from what they call "The spread" which is essentially the difference btw the buy sell rate. (notice how the numbers we want is always on the other side of the board?)

So if you are going to withdraw money often...converting back to SGD, u may not actually earn as much interest, maybe even lose more. (transaction cost in a way)

Life suxx ehhh? They earn so much yet can still fail....dunno wat to say.

Advice to TS: if by the time u convert back and you dun earn as much (at the same time risking currency fluctuations and other things like not being able to withdraw within certain time period) Its probably not worth the effort.

Just my 2cents opinion. :bsmilie:
 

chiangkxv

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Jul 5, 2008
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#13
Interest rates may look good as advertise... but u need to find out how is the interest compounded.. monthly vs annually makes lot of different.
 

acpical

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Jul 25, 2007
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you are exposing yourself to currency risk, that might explain the favourable rates.

let's put it this way, if let's say... 1 sgd = 5 alien currency, singapore banks give 1% interest rate. your 1sgd become 1.01 sgd after a year.

if at this point in time, alien bank gives 10% interest rate, but at the end of the year, alien currency cui, become 1 sgd = 20 alien currency... so your 5 alien currency become 5.5 alien currency, but less than 0.25 sgd.

hope this explains it. this is without taking into account whether the bank is safe or not.
Yes, the bank will convert your SGD to Rupees. Say you deposit S$10,000 today and the exchange rate is 33.88, you will get INR338,800 in your account.

At the end of 12 months at the interest rate of 1.45%, you will get back INR343,713 (338,800 x 1.0145).

Now, if the exchange rate at the end of 12 months is 35.00, your INR343,713 will be worth S$9,820. Conversely, if the exchange rate moves to 31.00 at the end of 12 months, your Rupee will be worth S$11,087.

What you are doing is taking the exchange rate risk in return for higher interest rate paid on Rupees vs what you can get on the SGD.
Sorry to say, but everytime you make a currency transaction, they (the bankers or the money exchange people) earn. They earn from what they call "The spread" which is essentially the difference btw the buy sell rate. (notice how the numbers we want is always on the other side of the board?)

So if you are going to withdraw money often...converting back to SGD, u may not actually earn as much interest, maybe even lose more. (transaction cost in a way)

Life suxx ehhh? They earn so much yet can still fail....dunno wat to say.

Advice to TS: if by the time u convert back and you dun earn as much (at the same time risking currency fluctuations and other things like not being able to withdraw within certain time period) Its probably not worth the effort.

Just my 2cents opinion. :bsmilie:
Please stop spreading misinformation here. TS is asking about a SGD FD. Now, ICICI may use the proceeds in whatever way they want e.g. buy INR, USD etc. If the TS is using existing SGD to place the FD, there is no FX risk at all. He will still get back the principal and stated interest on maturity in SGD.

How come got forex risk when TS is doing S$ FD? The 12mth 1.4%pa is S$ FD.;)

And all banks operating in sg must be under the Deposit Insurance Scheme. So if FD amount is below the amount stated in the DIS, then it's full covered.
Seems like only you know what you are talking about here.
 

voxies09

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Apr 11, 2010
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#15
SGD to SGD fixed deposit is not giving a good interest.. better invest in other alternative ..
 

auron

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#16
if u put FD in foreign currency, you will be expose to exchange rate.. depending on how it goes, u may earn or u may lose. but if the exchange rate stay the same, you will lose some $$$ as there is the so called buy and sell spread.

if u put FD in SGD, then there is no exchange rate risk.
10k 1 year at 1.4% pa. u will get back $10140 at the end of 1 year. simple as that.
no matter what, the return is definitely better than just putting the $$$ into saving account.

as mentioned by somebody, there is a Deposit Insurance Scheme, which covered all deposit up till 20k. so even if the bank goes belly up, u can still get back 20k.
 

HydroPoP

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Jun 18, 2002
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#17
if u put FD in foreign currency, you will be expose to exchange rate.. depending on how it goes, u may earn or u may lose. but if the exchange rate stay the same, you will lose some $$$ as there is the so called buy and sell spread.

if u put FD in SGD, then there is no exchange rate risk.
10k 1 year at 1.4% pa. u will get back $10140 at the end of 1 year. simple as that.
no matter what, the return is definitely better than just putting the $$$ into saving account.

as mentioned by somebody, there is a Deposit Insurance Scheme, which covered all deposit up till 20k. so even if the bank goes belly up, u can still get back 20k.
Thats right, there is no exchange rate risk for SGD FD and 20k is insured by singapore govt. The 12 months SGD FD looks very attractive indeed.

I placed a 6 months FD with state bank of india earlier this year for 1.08%, just got my money back last month hee hee. :thumbsup:
 

reachme2003

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Oct 6, 2003
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#19
all S$ deposits with banks in spore are covered by deposit insurance. i think, more details can be found on MAS website.


My parents are planning to put fixed deposit with this bank because of the attractive interest rates. From what I've know its a bank from India.

http://www.icicibank.com.sg/index.html

However, I know nuts about banking and have not heard of them before. Anyone knows if this kind of banks are relatively safe as compared to the usual personal banks like POSB etc.?
 

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