(SINGAPORE) OCBC Bank and Standard Chartered Bank have intensified their fight to capture the baby bonus accounts to pretty amazing levels.

Both banks yesterday offered to double their interest rates for these accounts, to a lofty 2 per cent at least, even before the Aug 1 debut.

OCBC Bank said it will now pay 2.05 per cent interest on children development accounts (CDA) if parents sign up between Aug 1 and Sept 30, 2008.

This comprises a rate of one per cent per annum and a bonus rate of 1.05 per cent per annum.

Just last month, OCBC Bank had offered to pay a 0.8 per cent interest rate for a new CDA or one per cent if parents opt to save at least $50 a month. It also offered 1.5 per cent for a minimum fixed deposit of $6,000 of 12-month tenure.

Stanchart yesterday said all CDA accounts will be paid 2 per cent interest rate, up from 0.78 per cent. And for the first 100 parents who sign up, the bank is throwing in a free Nintendo Wii, worth about $600.

In terms of insurance cover, Stanchart is giving a $50 daily hospitalisation cash benefit due to hand, foot and mouth disease. And it will give parents $200 back for the first $1,000 spent on a free credit card which comes with the CDA.

The latest enticements from the two banks will be included in a package which will be sent to parents by the government this month to inform them that their existing CDA with DBS Bank will be transferred after July 31. All parents have to do is tick the new bank they want to manage their CDA.

In March, the government announced that OCBC and Stanchart had emerged successful bidders to manage the baby bonus scheme, estimated to be worth some $400 million, with effect from Aug 1.

They take over from DBS Bank, which offers a rate of 0.25 per cent on the CDA.

Started by the government in 2001 to encourage couples to have children, the baby bonus scheme has two components: an outright cash gift and matching contributions to the CDA.

For the third and fourth child, the total bonus from the government can go up to a maximum of $18,000.

In July 2007, there were 107,000 CDAs with $375 million in them, the government disclosed. On average, 35,000 to 45,000 babies are born each year.

Co-funding from the government into the CDA - which can only be used to pay for medical expenses, childcare and school fees - stops after six years.

This article was first published in The Business Times on May 22, 2008

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