Chinese authorities have offered to pay out more money to depositors in rural banks whose withdrawals have been frozen as part of the fight against one of the biggest banking scandals that has sparked mass protests.
The banking sector has been hit hard in the countryside following a crackdown campaign launched by Beijing to contain the housing bubble crisis and rising debt, with severe repercussions for the world’s second-largest economy.
4 banks in Henan province froze withdrawals in mid-April after authorities launched a crackdown on mismanagement violations that led to hundreds of thousands of depositors’ balance sheets being held up and sporadic demonstrations sparked.
In mid-July, the Henan Provincial Banking Authority announced that depositors with amounts up to 50,000 yuan ($7,341) would receive their money back. This comes after the demonstration became the largest of its kind since the crisis began and witnessed violence.
Since then, the banking authorities have been gradually making payments to more depositors with higher balances.
On Friday, banks and insurance companies in Henan province committed to repaying 350,000 to 400,000 yuan (approximately $51,000 to $58,000) of account holder deposits, saying in a statement that this category of savers will begin receiving their savings from Aug. 22.
The statement added that “deposits of less than 350 thousand will continue to be paid out,” noting that all depositors in this category have not yet received their money.
Authorities have accused four rural banks, as well as another rural bank in Anhui Province, of being involved in the fraud scheme, and have announced that they are investigating by the police.
Analysts say the Henan banking scandal has dealt an unprecedented blow to confidence in the Chinese banking system due to the extent of the fraud, as the banks involved have allegedly operated illegally for more than a decade.
The Chinese authorities are trying to prevent the violation of social stability in the months before the congress of the ruling Communist Party.
Source: AFP.