Henan Bank: China arrests hundreds of people in rural banking scandal

Since April, four rural banks in central China’s Henan province have frozen deposits worth millions of dollars, leaving hundreds of thousands of customers miserable in an already battered economy. stamped out by the draconian closures of Covid.

Xuchang, Henan City Police said in a statement on Monday that “substantial progress” had been made in repairing the damage and that the investigation into the incident was moving forward.

It said a criminal gang led by the alleged mastermind, Lv Yi, had taken control of four rural banks including the Xinminsheng Yuzhou Village Bank, luring depositors with the promise of annual profits. as high as 18%.

Distressed depositors have staged several protests in Zhengzhou city, the capital of Henan province, over the past two months to reclaim their savings, but their appeals have fallen on deaf ears. deaf.

In July, more than 1,000 depositors from across China gathered outside the Zhengzhou branch of the country’s central bank, the People’s Bank of China, to launch the largest-ever protest. now. The peaceful protest was violently crushed by the authorities, with police and plainclothes security personnel forcefully dispersing the protesters.

After the protest, the financial regulator of Henan said depositors will be refunded, with the first payments sent to the bank’s customers totaling less than 50,000 yuan ($7,200) deposited at a bank.

On Monday, financial authorities said they would roll out another round of refunds to customers, this time focusing on those with deposits ranging from 400,000 yuan ($57,800) to 500,000 yuan. 72,200 USD).

Depositors who lose more will receive an initial amount of 500,000 yuan with the rest set aside for now, according to regulators.

“After this repayment, the centralized repayment work will be largely completed and other issues will be solved by the four rural banks,” the statement said.

Races for China’s small banks have become more frequent in recent years, and some have been accused of financial mismatches or corruption. But experts fear that a much larger financial problem may be lurking, caused by the fallout from a real estate crash and soaring bad debts linked to the Covid-19 pandemic. .

About a quarter of total assets in China’s banking system are held by about 4,000 small lenders, which often have unclear ownership and management structures and are susceptible to corruption. corruption and severe economic recession.

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