China: Banking regulator pledges to reimburse more harmed savers

Posted 18 July, 2022

The Chinese banking regulator has assured that more customers of banks, whose withdrawals have been frozen since April, will be able to recover their money, after an online outcry and a tense demonstration against the authorities.

Weakened by the economic slowdown, four banks in central Henan province have suspended all cash withdrawals since April, taking thousands of small savers by surprise.

A situation that has since given rise to sporadic demonstrations. One of the most important took place on July 10 in Zhengzhou, the capital of Henan, located about 600 kilometers from Beijing.

After a demonstration dispersed in violence, the authorities assured that some depositors could recover part of their money – within the limit of 50,000 yuan (7,334 euros) initially.

"The next step will be the advance (of funds) for customers with more than 50,000 yuan" in savings in frozen accounts, the banking and insurance regulator told state media on Sunday, without, however, specifying the timetable.

So far, only a handful of injured savers have been able to partially recover their money, according to group conversations on the WeChat social network seen by AFP.

Some have complained of being unable to complete the procedures online, due to technical problems with the application.

The banking sector in rural areas in China is being hit hard by the central government's policy to contain the housing bubble and indebtedness in the world's second-largest economy.

Henan's banks in turmoil are part of a larger set of small banking institutions affected by liquidity and management problems.

The police announced on July 10 the arrest of people belonging, according to them, to a criminal organization, accused of controlling 2011 several local banks and of making illegal transfers through fictitious loans.

Wronged savers have accused the authorities of inaction, even of collusion with these banks.

Several hundred people demonstrated on June 10 in Zhengzhou. Some protesters said they had been beaten by unidentified individuals.

To prevent rallies, the Henan authorities were suspected for a time in June of having turned the health passes of a certain number of demonstrators into red, making it de facto impossible to travel.

A health pass is required in China to access the vast majority of buildings, shopping centers, public places, and also certain transport.

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