Chinese authorities will repay more victims of the nation’s biggest bank scam as it seeks to placate angry customers who have been denied access to tens of billions of yuan of deposits for months.


Clients from the four rural banks in the central province of Henan and one in Anhui with deposits of up to 100,000 yuan ($14,800) will be repaid from July 25, according to the local offices of the China Banking and Insurance Regulatory Commission.


Authorities began to repay individuals with deposits of below 50,000 yuan last Friday, after hundreds of disgruntled bank customers took to the streets to ratchet up pressure on the local governments over the past two months. Arrangements for those with higher amounts of savings will be subject to further notice, the watchdog had said.


An official probe into the case had found that Henan Xincaifu Group Investment Holding Co., a private investment firm with stakes in the five lenders, colluded with bank employees to take deposits and marketed financial products via online platforms, before transferring the money by fabricating lending agreements. The police had taken some suspects into custody and seized and frozen funds and assets involved in the case.


Most of the victims were unaware of the illicit activities of Xincaifu and never received high interest or subsidies on their savings, the CBIRC told an affiliated newspaper on Sunday. The regulator had said it won’t make repayments for accounts that are suspected to have involved illegal activities or received high interest from other channels.


Beijing has started to pare back the implicit government backstop for banks to reduce risky behavior and maintain long-term stability of the financial system. But officials are facing a difficult balancing act: If the public loses confidence in banks’ ability to survive on their own or state support in the event of liquidity stress, it could precipitate exactly the type of crisis authorities are trying to prevent.


China has nearly 4,000 small and medium-sized lenders that collectively control almost $14 trillion in assets. But confidence in these banks has waned since 2019, when the government seized a lender for the first time since 1998 and imposed losses on some creditors.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Topics #business ideas #Insurance #loan #News Biz #SEO marketing