(click to enlarge)
Being Singaporeans, it seems like it is a rite of passage for our parents to open up a POSB/DBS savings accounts for us as soon as we’re born.
However, as we might already know, the conventional banks offer yearly interests in exchange for growing your savings with them.
These might not be aligned with the values of our Singaporean Muslims.
Good news is, there are banks in Singapore that offer savings accounts that are Shariah compliant, in other words, in accordance to the Islamic law.
What that means is, the savings that the bank has collected won’t be used to generate interest or be invested in prohibited businesses such as gambling, weaponry and pork-related products, just to name a few.
How does Shariah compliant savings account works?
Despite those exclusions, Shariah compliant savings account holders will still be able to grow their savings in a form of hibah, or simply means gift.
To be able to provide the hibah sustainably, the banks grow those savings through Shariah compliant profits.
These banks will follow the advice from a panel of Islamic bank advisers to ensure that profit-generating activities are consistent with the Islamic law.
Today, the banks in Singapore that currently offer Shariah-compliant savings account build its foundation on either one of these Shariah concepts – Commodity Murabahah or Wadiah.
Quick recap – What is the difference between Commodity Mudarabah and Wadiah?
As you check out the comparisons later, you will notice that the hibah rates could vary quite differently, depending on the banks’ take between the 2 Shariah concepts – Commodity Mubarabah and Wadiah.
Commodity Murababah is based on the concept of profit-and-loss sharing, whereas, Wadiah corresponds on the basis of trust (Wadiah yad amanah) and savings with guarantee (Wadiah yad Dhanamah).
To put it differently, Murabahah (mark-up) is a Shariah concept where customers collect their returns in a form of profit, while the Shariah concept of Wadiah (trust and guaranteed safekeeping) allows customers to receive returns in the form of Hibah which is at the discretion of the Bank.
Hence, savings account based on Wadiah tends to have lower hibah rates because it takes on a lower risk per se.
Without further ado, here’s the 8 Islamic Savings Accounts that I’ve ranked, based on the highest to the lowest hibah rate, that are currently available in Singapore, as of 7 Nov 2019.
1) CIMB FasterSaver-i Account
CIMB bank, by far, offers the most attractive hibah rate in the market right now.
This is because it is based on the concept of Commodity Mudarabah.
In
particular to this account, the tiers are as follow:
First S$50,000 – 1.00% p.a.
Next S$25,000 – 1.50% p.a.
Next S$25,000 – 1.80% p.a.
Above S$100,000 – 0.60% p.a.
As you might observed, the tiered hibah rates are structured in such a way that it encourages you to save up your first S$100,000 as quickly as possible.
Once you’ve accumulated anything more than S$100,000, the rate is no longer as attractive.
One thing that I think worth mentioning too for CIMB, across all of its savings accounts, is that it does not charge a fall-below fee, unlike its counterparts.
Yes – the initial deposit amount of S$1,000 might be a considerable barrier to some, especially for students. The good news is, you may consider creating an account and withdraw some of that amount at a later date without being penalized for the balance to fall below S$1,000.
2) CIMB StarSaver (Savings)-i Account
Another type of savings account coming from CIMB, StarSaver (Savings)-i offers a fixed hibah rate of 0.8% per annum.
Hence, if you have savings more than S$100,000 to begin with, you might want consider this over FasterSaver-i.
Aside to that, it also offers free overseas ATM withdrawal.
Unless you need to do that frequently, FasterSaver-i would be a better choice to grow your savings.
3) Maybank i-SAVvy Savings Account-i
Maybank, in general, does not have the most attractive hibah rates as compared to CIMB as it is based on the Shariah concept of Wadiah.
As of date, it currently offers anywhere between 0.1875% to 0.5% per annum, depending on the amount of savings you’ve made with them.
One saving grace is that, it offers a lower initial deposit amount of S$500.
Hence if you do not have much starting savings capital to begin with, this savings account could be ideal.
4) Maybank Ar Rihla Regular Savings Account
When the Ar Rihla Regular Savings Account was first launched back in 2011, it was meant to target the Singaporeans Muslims who wish to start a savings plan for their Hajj or Umrah pilgrimage to Mecca.
With an average of $11,500 for a Hajj pilgrimage and $4,000 for Umrah pilgrimage, it takes an average person to save about $200 or $70 per month respectively for 5 years in order to afford it.
For this savings account, you’re made to save at least $50 per month and make an initial deposit of S$200.
You may look at it as a disciplined savings plan in which you’re committed to save a minimum amount regularly, and by doing so, Maybank rewards you with some hibah (gift) at its discretion.
As per last updated on its site in 2014, its hibah rate stands at 0.7%.
5) CIMB StarSaver-i Account
StarSaver-i is pretty similar to the StarSaver (Savings)-i account, except that it is based on Shariah concept of Wadiah.
It shares the similar hibah rate, which stands at 0.8% per annum.
However, this comes with a higher initial deposit amount of S$5,000.
A little incentive if you’re considering this – it comes with free cheque books. Might come in handy for self-employed individuals who are running sole proprietorship businesses to handle daily transactions with suppliers.
6) Maybank Savings Account-i
Another Wadiah-based savings account, this account looks like it is more targeting towards foreigners who are working in Singapore (with work permit) as it offers zero dollar initial deposit amount to start an account with.
For others, it requires a deposit amount of $500.
With its low barrier to start an account with, it has a relatively lower hibah rate of maximum 0.25% per annum.
7) Maybank PremierOne Account-i
This is somewhat an equivalent to CIMB StarSaver-i account, which is designed to target self-employed business owners who might need cheque books for their daily transactions.
Unlike CIMB StarSaver-i account, it has a lower deposit amount of S$1,000.
However, it also does come with a trade-off too with a lower hibah rate of a maximum of 0.25%.
8) OCBC Al-Wadi’ah Savings Account
Last but not least, we have OCBC.
Honestly, I had trouble looking for its information online as they do not specifically market this publicly on their website.
Hence, I emailed them directly and they followed up with a call a couple of days later to check on my interest.
Essentially, you will have to go down to their physical branches personally to open up an account.
Its hibah rate stands at maximum 0.1%, which is the lowest among others in this list, and at least $1,000 is required to open an account.
One standout feature though, it offers an auto-deduction for zakat based on the savings you’ve made in its account, so that is one hassle-free way to cleanse your savings.
In Summary…
Whichever the savings account we would like to go for, we just have to be mindful of how do we want to keep up, or at least close the gap, for our savings from eroding in value over time in the most Shariah-compliant manner.
As of 2019, the inflation rate is 1.33% as per Statista 2019 data.
Understandably, most savings account here has a hibah rate of less than 1.33% (with the exception of CIMB FastSaver account), hence savings account alone is not enough and we should be prepared to allocate our funds in other Shariah-compliant investments too.
Now it’s your turn.
I’ve summarized the different Shariah-compliant savings account in Singapore from the various banks.
Now I want to turn it over to you. Which one are you planning to start an account with and why?
Let me know by leaving a quick comment below.
Assalaamualaykum.
Thank you for your research, may Allah bless it.
May I enquire if OCBC has a shariah committee managing their wadiah accounts’ funds?
Thank you.
Salam Yaseen, OCBC has a Shariah Advisory Committee based in Malaysia. Check it out here. I believe all Shariah-related matters go through them.
This is very useful! Have been contemplating between Maybank & CIMB for very long. Jazakallah Khair!
Thanks for the write up but cimb fast saver has changed their hibah structure as follows:
First S$50,000 0.50% p.a.
Next S$25,000 0.80% p.a.
Next S$25,000 1.50% p.a.
Above S$100,000 0.40% p.a.
Very sad to see they have lowered the rates substantially.
Thank you for sharing this!
Alhamdulillah..many thanks for having this comparison as i am thinking of where to place my cpf saving aft 55yo so as to avoid any form of riba..as im not keen to leave it in cpf eventhough it carry higher int rate…Jazakallah khair
Alhamdulillah. Glad it helps!
A good share.. thank you
Hope it helps!
Great!
Thanks for your research and share in detail.
Alhamdulillah, hope you find it beneficial.
MashaAllah. Alhamdulillah. Been asking MayBank Malaysia about this for MayBank Singapore. The staff in MB Malaysia did not know. Been asking families in Singapore too, none of them know, till one of them found this research from you. Anyway, I am a Singaporean who stays in Malaysia but wants to keep my Dollars using Islamic Compliance Bank. Thank you so much. It is a great help. May Allah bless you.
Alhamdulillah. Thank you Sina for your kind words.
Assalamualaikum,
Syukran Jazilan, Jazakallah Khairon for the research and well-written post!
Keep up this great work. 🙂 It’s really beneficial for beginners like me, who want to learn more about Islamic banking and the likes.
Waalaikumsalam, thank you Nabilah. I’m glad you benefit from it 🙂
Salam, which one of this you personally use?