Sarwa Offers Cash Account That Giving More Four Times Interest Than Any Banks
The program has a 3% interest rate, no minimum balance requirement, and no administration fees. The customer’s funds will be kept in US dollars in Sarwa’s cash account.
A cash account with a 3% annual interest rate has been introduced by low-cost rRobo-advisory platform Sarwa in the UAE, as banks in the Emirates continue to give clients poor savings returns despite eight straight base rate increases by the UAE Central Bank since last year.
According to Sarwa Save, there are no transfer costs for local dirham accounts, no minimum balance requirements, and no administration fees.
The customer’s funds will be kept in the account in US dollars. It will be hosted overseas with Danish bank Saxo Bank, a partner of Sarwa.
The Financial Services Regulatory Authority, which oversees the free zone, granted clearance for the new product to Sarwa, which is governed by the Abu Dhabi Global Market.
Mark Chahwan, co-founder and CEO of Sarwa, stated that while he and his team “strongly believe in long-term passive investing, we are also aware of how economic conditions might affect short to medium-term goals.”
An effective financial strategy must include a short-term investing alternative. Our customers needed a solution that would let them store their money and earn interest.
Earlier this month, the US Federal Reserve boosted its benchmark interest rate by 25 basis points as it fought inflation, prompting the UAE Central Bank to increase its base rate for the 24/7 deposit facility by an extra quarter of a percentage point, from to 4.65 percent from 4.4 percent.
Due to their currencies’ pegs to the US dollar, the majority of central banks in the GCC monitor changes in the Fed’s policy rate. The six-member economic union makes an exception for Kuwait, whose dinar is tied to a basket of currencies.
While borrowing costs have increased along with rate hikes, banks have been slower to pass through the advantages to savers.
For their savings accounts, the majority of local banks in the UAE have minimum wage and balance restrictions.
For instance, the Ghana Savings Account from ADIB has a 0.36 percent interest rate but requires a minimum salary of Dh20,000 and a balance of Dh3,000.
While an HSBC savings account provides an interest rate of 0.05%, an Emirates NBD savings account gives an annual return of 0.20%.
“As of right now, the average interest on savings accounts in banks in the UAE is somewhere about 0.8%. Nearly four times as much is offered by Sarwa Save, according to Mr. Chahwan.
According to him, Sarwa Save is intended for investors who wish to get a return on their capital stored or those who are just beginning their investing adventure.
Through the Sarwa website and mobile app, both new and existing clients can purchase the product.
Sarwa provides Save Halal, a low-risk money market fund portfolio made up of cash and cash-equivalent assets with a projected return of 3%, for individuals seeking a Sharia-compliant alternative.
The anticipated return rate takes into account the 0.5% administration fee this product charges.
The cash account doesn’t charge a fee for transactions and it may be combined with Sarwa Invest accounts.
According to Sarwa, the tool makes it simpler to combine the many products a client seeks into a single app, including interest-bearing cash deposits, hands-off long-term investing, and self-directed trading.
A solid investment plan must include diversification, and we’re pleased to keep broadening our selection of wealth management solutions, he added.
With a variety of tools available in one location, we want to assist everyone manage their money so they can achieve their financial objectives.
Sarwa, a 2017 startup with 100,000 customers, rates an investor’s risk tolerance using artificial intelligence, assigns them a custom exchange-traded fund portfolio, and charges them cheaper advising costs than conventional wealth managers and financial advisors.
Sarwa secured $15 million in a fundraising round headed by Mubadala Investment Company of Abu Dhabi in August 2021.
