Leeds Building Society, a UK-based firm that provides savings, mortgages, investments, loans and other services, has launched a new savings account, a fixed-rate monthly income bond paying 4% interest to savers.

The new account provides some relief for savers, who have been facing difficulties since the launch of Funding for Lending scheme by the government in 2012.

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The interest rate offered by Leeds is eight times the Bank of England base rate and almost double than the current rate of inflation.

The bond pays a monthly return of 4% per year on investments between £10,000 and £1m. However, to claim the interest, customers have to agree to lock their money for ten years until 31 December 2023 without any withdrawals.

Leeds Building Society sales and marketing director Kim Rebecchi was quoted by which4u.co.uk as saying that offering a monthly income from savings offered an important distinction on existing products in the market.

"We have looked at the savings market and, in this historically low interest rate environment where many customers are on fixed incomes, there is a need to generate an income from their savings.

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"That is why we have launched this unique 10-Year Fixed Rate Monthly Income Bond that pays 4%. At the end of the product term, customers will have benefited from an income totalling 40% and still have all their capital," Rebecchi added.

The new fixed-rate savings account paying 4% is next to the State Bank of India’s UK unit that offered a five-year product paying 4.2% in November 2012, and is followed by Secure Trust Bank that pays 3.52%.