By RACHEL SIM

MAYBANK Singapore is launching its first retail Islamic term deposit - paying a return four times more than conventional fixed deposits.

For a limited period, the Term Deposit-i will pay 0.6 per cent, one per cent and 1.4 per cent for tenures of three, six and 12 months respectively.

The minimum placement is $10,000 for 12-month tenure or $25,000 for three and six-month tenures.

This is four times what fixed deposits offered by DBS Bank pay. DBS pays 0.15 per cent and 0.25 per cent for fixed deposits of three and six-month tenures.

For the 12-month Deposit-i, the 1.4 per cent returns is about three times the 0.45 per cent that DBS pays.

The maximum amount for Deposit-i rates is $250,000.

Explaining the limit, a Maybank spokeswoman said that the promotion is to create awareness of Islamic banking products among retail customers and the cap allows it to better manage deposit collection.

Before Maybank's latest move, Islamic deposit products were only available to the very rich in Singapore.

In May, Islamic Bank of Asia, a unit of DBS, offered a US-dollar Islamic placement which required a minimum US$500,000 for three and six-month terms.

Maybank said that the launch of Deposit-i follows the success of a similar product sold in Malaysia since May. In just two months, Maybank Islamic Bhd has attracted more than RM1.3 billion (S$530.5 million) of deposits.

'Consumers are on the lookout for an alternative to conventional products, and this term deposit, being syariah-compliant, may match their needs,' said Mohd Ismail Hussein, head of Islamic banking at Maybank Singapore.

'Islamic banking is a fairly new concept in Singapore which is gaining momentum very quickly,' he added. 'There are also non-Muslims among our Islamic banking customers, and this shows the concept is for everyone.'

With Maybank the market leader in Islamic banking in Malaysia, the Singapore operation is in good stead to 'break the ice' between Islamic banking and the local retail market.

Since the introduction of Islamic deposit products in 2005, Maybank Singapore said that it has enjoyed an average year-on-year increase of over 40 per cent in them.

This article was first published in The Business Times.