Chinese regulators have promised to compensate more victims of one of the country’s biggest banking scandals after hundreds of thousands of customers were left without access to funds, sparking rare mass protests.
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 rocked the world’s second-largest economy.
Four banks in Henan province froze cash withdrawals in mid-April as regulators scrutinized alleged mismanagement, leaving behind billions of yuan in savings and sparking sporadic demonstrations.
Authorities later named these firms and another rural bank in nearby Anhui province as involved in a scheme to defraud investors – and promised victims would start getting their money back.
“The Henan New Fortune Group manipulated five village banks in Henan and Anhui to illegally absorb and occupy public funds … and cover up illegal activities,” an unnamed official with the China Banking and Insurance Regulatory Commission told state media on Sunday Citing a three-month initial police investigation.
“The next stage will be to start prepayment for customers over 50,000 yuan (deposited).”
The Henan banking scandal has dealt an unprecedented blow to public confidence in China’s financial system due to the size and scale of the fraud, analysts say, with the banks involved said to have been operating illegally for more than a decade.
Chinese authorities are desperate to avoid disrupting social stability just months before a major congress of the ruling Communist Party.
A July 10 mass demonstration in Henan’s provincial capital, Zhengzhou, was violently crushed, with protesters being forced into buses and beaten by police, according to AFP eyewitness accounts and verified photos on social media.
Shortly after, the Henan provincial banking regulator said customers with deposits of less than 50,000 yuan ($7,500) would be repaid starting Friday.
But in a WeChat group with hundreds of depositors, only a handful reported successfully getting their money back, according to news from AFP.
Some customers said they received their deposits on Friday, while others complained that the intended mobile app had bugs and wouldn’t register, according to local media.
The repaid funds came from some confiscated assets of Henan New Fortune Group, the company accused by police of rigging the banks, state broadcaster CCTV reported last week.
Regulators said depositors will be paid in batches, but did not announce a specific timeframe for accounts with more than 50,000 yuan in funds to be repaid.
#Chinese #banks #vow #pay #customers #protests
