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China’s banks are repaying some customers after mass protests

#Chinas #banks #repaying #customers #mass #protests

Customers of rural Chinese banks whose withdrawals have been frozen will get some money back from Friday, regulators said after depositors clashed with authorities in a rare protest over the weekend.

China’s rural banking sector has been hit hard by Beijing’s efforts to stem a housing bubble and rising debt, in a financial crackdown that has had far-reaching implications for the world’s second-largest economy.

Four banks in Henan province froze cash withdrawals in mid-April amid regulatory probes over alleged mismanagement, leaving thousands of savers without money and sparking sporadic demonstrations.

In one of the largest rallies of its kind, hundreds gathered outside a branch of the People’s Bank of China in Henan’s capital Zhengzhou on Sunday, demanding their money.

The protests prompted a harsh official response, with protesters being forced onto buses by police and beaten by plainclothes men, according to eyewitness reports given to AFP and verified photos on social media.

Some depositors can now get their money back, the Henan provincial banking and insurance regulator said in a statement Monday.

Retail customers with deposits of up to 50,000 yuan ($7,442) will be repaid starting Friday, the regulator said, while repayment terms for others will be announced separately.

“Funds involved in illegal or criminal (activities) will temporarily not be returned,” the regulator said.

The announcement came a day after local police said they had arrested members of a “criminal gang” accused of taking over local banks and making illegal transfers through fictitious loans.

Protesters in a social media chat group seen by AFP were skeptical about the repayments, with one suggesting that “people with more than 50,000 yuan (in deposits) will continue to wait endlessly.”

– Deepening crisis –

Henan banks are among a wave of small local financial institutions hit by liquidity and management problems.

Anhui province also announced on Monday that it would start repaying deposits from some customers at a bank in Bengbu city, following online complaints and local media reports of frozen withdrawals.

Protests are rare in tightly controlled China, where authorities enforce social stability at all costs and resistance is quickly suppressed.

But desperate citizens have occasionally managed to organize mass gatherings, usually when their targets are local governments or individual businesses.

The demonstrations in Henan — and the crackdown that followed — have prompted a surge of support, with many on the Weibo platform pointing fingers at local officials.

“Why do you treat ordinary people like this?” asked a user in a post on Monday.

Some of Sunday’s protesters accused officials of colluding with local banks to suppress rallies.

Provincial authorities were accused last month of abusing the country’s mandatory Covid-19 health law to effectively bar protesters from public spaces.

Under Beijing’s strict zero-Covid strategy, the pass has become a ubiquitous part of life in China, and is required for access to most buildings, malls, public places, and also certain public transportation.

Analysts at ANZ Bank said on Tuesday that while the value of the funds involved in the Henan crisis was small, “the social impact of the incident could be significant if not handled appropriately.”

“It could also trigger another round of regulatory tightening,” the analysts said in a note.

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#Chinas #banks #repaying #customers #mass #protests

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