4.89% 6-month CD - Another Look at SBI
Jan 6, 2006 - 6:50 PM by Ken Tumin
The US operations of the State Bank of India (SBI) continues to have some very competive short term CD rates although they're not quite as good as when I first posted on the bank in November. For a minimum deposit of $1K, the 6-month and 12-month CD rates are 4.68% and 4.78% APY. For a $50K minimum deposit the 3, 6 and 12-month rates are 4.58%, 4.78% and 4.89% APY. For deposits over $95K, the 1, 3, 6 and 12-month rates are 4.52%, 4.68%, 4.89% and 4.99% APY.
Although the CD rates have gone down slightly since November, the money market rate has gone up substantially. The rate for deposits under $25K is 4.23% APY. A minimum balance of $2.5K is required to avoid fees.
The longer term CDs don't have rates much better than the 1-year CD. Only the 5-year CD has a rate that's higher at 4.89% for deposits under $50K. These longer term CDs have a Flex option with deposits over $10K. This gives you the option to bump up the rate once during the term. The rates of these Flex CDs are the same as the convential CDs. Another nice feature of these CDs is a fairly lenient early withdrawal penalty. The 1 and 2-year CDs only have 90 day of interest penalty.
As I mentioned in my previous post, SBI is FDIC insured and its California branch has a sound rating (4/5 stars) at Bankrate.com. The website is still weak with no apparent online banking capability. Transactions would have to be done by mail and by phone. I have found some interesting info about fines issued against SBI by US regulators in 2001. However, these fines don't seem related to financial problems but a lack of compliance to transaction reporting to prevent terrorist financing and money-laundering.
One way of dealing with banks like SBI which offer very good CD rates but lack online banking is to open a money market account and connect it with an online account like HSBC's Online Savings. This can then make it easy to manage a certificate of deposit. You can request SBI to transfer money from the money market to fund the CD. When the CD matures, you should be able to request that the money be transfered to the money market account. From there you can use the external online account to pull the money out.
Although the CD rates have gone down slightly since November, the money market rate has gone up substantially. The rate for deposits under $25K is 4.23% APY. A minimum balance of $2.5K is required to avoid fees.
The longer term CDs don't have rates much better than the 1-year CD. Only the 5-year CD has a rate that's higher at 4.89% for deposits under $50K. These longer term CDs have a Flex option with deposits over $10K. This gives you the option to bump up the rate once during the term. The rates of these Flex CDs are the same as the convential CDs. Another nice feature of these CDs is a fairly lenient early withdrawal penalty. The 1 and 2-year CDs only have 90 day of interest penalty.
As I mentioned in my previous post, SBI is FDIC insured and its California branch has a sound rating (4/5 stars) at Bankrate.com. The website is still weak with no apparent online banking capability. Transactions would have to be done by mail and by phone. I have found some interesting info about fines issued against SBI by US regulators in 2001. However, these fines don't seem related to financial problems but a lack of compliance to transaction reporting to prevent terrorist financing and money-laundering.
One way of dealing with banks like SBI which offer very good CD rates but lack online banking is to open a money market account and connect it with an online account like HSBC's Online Savings. This can then make it easy to manage a certificate of deposit. You can request SBI to transfer money from the money market to fund the CD. When the CD matures, you should be able to request that the money be transfered to the money market account. From there you can use the external online account to pull the money out.
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