Chinese Police Arrest 234 Over Rural Banks Scandal in Henan

 

Chinese authorities have arrested 234 people, who are suspected to have illegally controlled four rural banks in central Henan province.

The group committed a “series of severe crimes,” the Xuchang public security bureau said on Monday, which included raising the annual return rate above markets levels, to 13%-18%, in order to attract depositors.

In mid-July about 1,000 people gathered outside the provincial branch of the Chinese central bank in Henan’s capital of Zhengzhou to demand action on their deposits, as they had been unable to withdraw their money. That led to some of the most violent clashes since protests began in May.

In April, a handful of banks in Henan froze deposits raised from ordinary Chinese people, with Chinese media reporting that the deposits could be worth up to $1.5 billion. Other outlets put the figure even higher.

Authorities said a large number of people were caught up in a complex scam that has sparked protests and renewed concerns about the 4,000 small banks operating across China.

Authorities started repaying depositors on July 15 to try to shore up confidence.

The work of loss recovery has achieved significant progress and the investigation is now pushing forward, the Xuchang security bureau said in a statement.

Financial regulators in Henan said they would on Tuesday launch another round of repayments to the banks’ customers.

Individuals with deposits of between 400,000 yuan ($57,818) and 500,000 yuan would be repaid, the Henan branch of the China Banking and Insurance Regulatory Commission and the provincial financial bureau said in a joint statement.

Following this round, the repayments work by the government would largely be completed, and further matters would be dealt with by the four banks, the Henan regulators said.

 

  • Reuters, with additional editing from Alfie Habershon

 

 

Read more:

 

China Banks, Officials Resisting Beijing’s Property Rescue Call

 

Two China Provinces to Repay Depositors After Rare Protests

 

China Property Service Groups Hurt by Parents’ Debt Woes

 

 

 

Alfie Habershon

Alfie is a Reporter at Asia Financial. He previously lived in Mumbai reporting on India’s economy and healthcare for data journalism initiative IndiaSpend, as well as having worked for London based Tortoise Media.