By Paul Lewis
BBC Radio 4's Money Box
Indian bank ICICI is following in the steps of Dutch bank ING
Savers in the UK are being offered a market-leading 5.4% rate on their savings, by India's largest private bank ICICI.
Its HiSave account has to be opened and run through the internet.
It pays the 5.4% rate from the first pound and has no restrictions on how much money can be put in or taken out.
ICICI UK Chief Executive Sonjoy Chaterjee told BBC Radio 4's Money Box he would promise a good rate for two and half years but could not guarantee it would stay at 5.4%.
"We are carrying a guarantee of 25 basis points [0.25%] over the base rate up to 31 December, 2007," he said.
"That would be 5% as it stands now.
"We will hold onto 5.4% for a while. I would not like to put a date to it.
"We would not put it just for a month or so. We would hold on to it for at least six months."
ICICI UK has set a target of winning £500 million savings from UK customers this year.
But Sonjoy Chatterjee denied that if they achieved that, the interest rate paid would start drifting down.
"We haven't given thought to that so I can't comment yet," he said.
"But we will need to look at the whole balance sheet and the savings side of the balance sheet and take a call on the interest rate, whether we move it up or down."
Mr Chatterjee said he can pay this rate because his bank is big and cheap to run.
It claims to have 10 million internet customers, putting it in the top 10 internet banks in the world.
HiSave accounts in the UK would be processed using the same low-cost platform in Bangalore.
"It is this cost [saving] we are transferring to our customers in the form of this high rate."
He also stressed that the money was safe:
"Unlike a lot of other overseas bank operations here, we are not a branch," he said.
"ICICI UK Ltd is a locally incorporated bank under the Financial Services Authority and carries its deposit guarantee scheme.
"That works out roughly about £30,000. And that is why we did it this way instead of a branch."
The Financial Services Compensation Scheme guarantees the first £2000 deposited in a UK based bank, and 90% of the next £33,000 meaning that the maximum compensation is £31,700.
With a market-leading rate on savings, demand for the new account could be very high.
Asked if the bank could cope with a lot of applications at once, Mr Chaterjee said:
"It's our desire to take the first steps towards being a global bank and this is our first mainstream product to that end.
"So to process and service and be up to speed with this customer segment is paramount.
"These customers are coming to this bank for the first time so we will pull out all the stops to do that."
Although regulated by the FSA and protected by the Financial Services Compensation Scheme, ICICI UK has not yet joined the Banking Code.
The BBC has learned that an application has now been made and is being considered by the Banking Code Standards Board.
BBC Radio 4's Money Box was broadcast on Saturday, 9 July, 2005 at 1204 BST.
The programme was repeated on Sunday, 10 July, 2005, at 2102 BST.