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BEIJING: Police in China’s Henan province have arrested 234 suspects in connection with a rural banking scandal, the public security bureau of the province’s Xuchang city said on Monday (Aug 29).
Deposits worth at least US$1.5 billion at a handful of small lenders in Henan have been frozen since April in what authorities have said was a complex scam that has sparked protests and renewed concerns about the 4,000 small banks operating across China.
The scandal has come as China’s economy slowed sharply in the second quarter as widespread COVID-19 lockdowns hammered demand and business activity, while the property market has lurched from crisis to crisis.
The Xuchang public security bureau said in a statement the work of loss recovery has achieved significant progress and the investigation was pushing forward.
It said a group of criminals illegally controlled four rural banks including Yu Zhou Xin Min Sheng Village Bank, and they were suspected of committing “a series of severe crimes”.
They lured some depositors with an annual return rate of 13 per cent to 18 per cent, said the bureau, which is much higher than levels in the wider market.
In a bid to shore up confidence in the banking system, Henan authorities started repaying depositors in the four rural banks on Jul 15.
Financial regulators in the province said they would on Tuesday launch another round of repayments to the banks’ customers.
Individuals with deposits of between 400,000 yuan (US$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, Henan financial regulators said.
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