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Education Savings on the Sharp Rise
Chinese parents are taking advantage of a new bank account to save up for their children's education.
They deposited 2.6 billion yuan (US$313 million) in special education savings accounts at the Industrial and Commercial Bank of China (ICBC) by the end of April, the bank reported.
The ICBC was the first bank to launch an education savings service in China.
The accounts, which carry higher interest rates and enjoy exemption from interest tax, encourage parents to save up for their children's senior high school and college study, bank officials said.
Around 3.43 million education accounts have been opened in the bank since the service began on September 1 last year.
More than 90 per cent of the money was put in after a deposit interest tax was introduced in November, bank sources said. The education savings account was exempt from this tax.
The brisk business prompted China's central bank, the People's Bank of China, to issue a special regulation on education savings last month.
The regulation gave the go-ahead to all financial institutions dealing in deposits, excluding post offices, to open similar services.
The savings account has terms of one year, three years and six years. The highest deposited sum should not exceed 20,000 yuan (US$2,410).
But some parents have complained about the limit of the deposit volume, which they thought insufficient to cover the growing costs of higher education. They also called for a more simplified process for savings and withdrawals and improved services.
The ICBC also launched low-interest education assistance loans last August.
By the end of February, the bank had issued 9.07 million yuan (US$1.09 million) of education loans, bank sources said.
The loan, which is being offered on a trial basis, is available in eight Chinese cities, including Beijing, Shanghai, Tianjin, Chongqing and Wuhan.
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