SBI, Thomas Cook tie up for Holiday Savings Account for online customers

After having stablised tie-ups with three private banks for offline Holiday Savings Account (HSA), Thomas Cook and State Bank of India will together offer a similar facility to the state-owned bank's 25 million online customers.

This is a 12-month recurring deposit with SBI that allows the bank's customer to save money and also pre-select a holiday from Thomas Cook India's portal.

The cost of package -- seven domestic and seven international for now -- will be divided into 13 instalments. The customer will open e-recurring deposit (e-RD) account on (www.onlinesbi.com) for 12 instalments. Deposits will earn interest at the prevailing rates. The present interest rate for SBI's 12-month recurring deposits is 7.25 per cent.

At end of 12 months, the maturity proceeds from deposits would be transferred to Thomas Cook to pay for the pre-selected holiday package. The travel company will fund the balance amount (13th installment) to buy the holiday package after factoring in the accrued interest.

SBI managing director (National Banking Group), Rajnish Kumar, said this will encourage planned savings and advance booking. Previous experience shows that many people don't plan their holidays in advance and end up taking last-minute loans to finance the same.

Madhavan Menon, chairman and managing director, Thomas Cook Ltd, said customers will pay for a future holiday at today's prices while earning interest on the linked e-recurring deposit.

The travel company already has arrangement with ICICI Bank, IndusInd Bank and Kotak Mahindra Bank for HSA deposits in off-line space. TCL booked 13,000 packages in 2015 through such arrangement, he said.

State Bank of India