onenri

Recently I realised that my savings in ISA are not earning any interest. This is the problem with most savings accounts that offer teaser rates. Most of the banks lure you with a good rate that only works for the first year then reverting back to there standard interest rate which mostly is insignificant. This implies you have to be reviewing your finances every year to shop for better interest rates. That may be good for some but majority of us not that savvy.

So this year I decided to have a look around at what's on offer. This meant comparing different bank accounts. In low interest rate economy finding a good deal on savings account was a hard task. There were not many good products on offer from high street banks. I expanded my search to online but making sure the banks compared are FSA regulated and covered by FSA compensation scheme. To my surprise in most variants of my search the list was topped by Indian banks like State Bank of India and Bank of Baroda. And these rates were not only for NRI accounts but even for regular savings accounts as well. The interest rates offered were good enough to beat the ISA interest rates even after tax deduction.

That got me interested and I researched little more into these accounts. The interest rates on offer were not only competitive in pound sterling for UK but also for dollar accounts. Some of the products offered were quite innovative like State Bank of India's stepped up bond account which gives you better interest rate with your loyalty. If you keep your money with the bank your savings interest rate is stepped up each year going up-to 5.75% by the fifth year. There were fixed term bond accounts on offer as well as even the regular savings account was beating the high street banks easily.

Now with the experience of banking services in India, I was still little apprehensive to the level of service these banks will provide. I had heard the harrowing stories of my friends on how difficult it was to just open an NRI account. But still I took the plunge and decided to have a try. I decided on State bank of India as I likened it’s stepped up bond account.

Although on SBIUK website there were clear and easy instructions on opening the bank account through post, me being very sceptical with service I may expect I decided to visit there branch. As Birmingham branch was open on Saturdays till 2.30 PM I decided to visit there. Before travelling I did phone them trying to reassure myself that I had all the documentation I need. The documentation required, to my surprise, wasn't much. They asked for one proof of identity and one utility/credit card bill just like any other UK bank. This was against my past experience as I expected lots of documents and then multiple photo copies of each and then attestations from notaries etc. Anyways I decided to take my passport and a bank statement with me.

But all was not going to be smooth ride. To my bad luck I got stuck on the motorway. It seemed we have to wait in jam for long so my wife phoned SBI branch in Birmingham to make sure they will entertain us if we reach few minutes before close. We were assured yes and asked to try to make it by 2PM as it may take half an hour to process the application.

Bad luck continued and we were delayed further and it was clear we will not even be there by 2.30PM. Another phone call and Rajinder at the other side of the call re-assured us he will wait for us. That was way above the call of duty we were very impressed. We reached there around 2.35 PM and as promised Rajinder was at the door to greet us. After that opening the account was a breeze although there was no hurry from staff, they took time to explain our different options and what was on offer. Another half an hour and we had our sort code and bank account number in hand. Within 10 days we received in post our online bank id and password in two separate letters.

So I as you can figure out I was quite happy with the service, for service I will rate SBI UK 10 out of 10. Now let’s review the bank accounts and other banking features on offer. At the time of this writing the various accounts on offer and there features are listed below:

Current Account

• Cheque Book
• Direct debit facility
• Standing orders
• Regular account statements
• Online banking
• Free remittance

Instant Access Savings Account (Good Value)

• Instant access to money without interest loss
• 2% AER.
• Free money transfer to India.
• Online banking

Hi Return Fixed Deposits

• High rate of interest
• Deposit for up-to a period of 5 years
• Minimum investment of £1000, US $ 10,000 or Euro 10,000

Step Up Deposits(My Favourite)

• As long as you keep the funds with us, you will get the higher rate the following year.
• Minimum deposit is £1000.00 and the maximum £2 million.
• Note: You can’t take the money out before two years without loosing some interest

Fixed Deposits

• Option to make deposits in sterling, US Dollars and Euros
• Minimum deposit of £10,000/ US$ 20,000/ EURO 20,000
• Flexible period ranging from 1 month TO 11 months
• Automatic renewal facility on maturity

Difference between Current Account and Instant Access savings account is interesting to note. Savings Account gives you 2% AER. With its instant access nature it is good alternative to any current account. I couldn’t find any current account that comes close. What you loose in features here is the cheque book, direct debit facility, standing orders etc. But with 2 hour money transfer intra bank these days these are hardly the features I will miss. I currently have a current account with HSBC which I will keep for these features. But I intend to keep my money in SBI instant access savings account and transfer to HSBC on need basis.

Other thing to note is SBI UK doesn’t mention on its website that stepped up bond account has 2 years lock-in period. I found this out talking to the staff at the branch. Although I think this is reasonable but I would have been happier if this lock-in period was one year. Why lock-in the user for more length if you are already giving him the carrot of stepped up interest rate the next year. Free money transfer service comes with most of the accounts. I am not too excited by free money transfer services as most of the times conversion rate used is not competitive enough. I asked SBI on this and they said that they use one of the best conversion rates and also customer can phone in advance to know what conversion rate will be used for that day. I haven’t tested them on their word for this.

Its time for ratings:

Service 10 out of 10: I must say this may very much depend on personnel you have to deal with but my experience so far is flawless.

Flexibility - 9 out of 10: Options for current account, savings, fixed deposits and stepped up bonds, deserves a 9. It could have been 10 only if they would have clubbed an ISA account in -cherry on the cake.

Accessibility - 7 out of 10:Although people are getting used to net banking. Still need for high street presence is not going away any sooner. SBI has few branches in targeted areas with higher NRI presence but if they want to target wider UK public they need more branches.

Overall Value - 9 out of 10: In competitive interest rate environment getting a good interest rate with such flexible accounts is rare so I will say SBI’s UK venture deserves them a 9.