Security

Chinese police round up hundreds in rural banking scandal

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August 30, 2022

Chinese authorities are cracking down on rural banks and recently arrested 234 suspects allegedly involved in a scandal that left customers with millions of frozen assets.

Four banks in China's central Henan providence have frozen deposits since April, which has impacted hundreds of thousands of customers and led to protests across the country, according to a report by CNN.

Chinese police claim a criminal gang led by Lv Yi took control of the banks and promised depositors fraudulent returns of up to 18% annually. In July, more than 1,000 protestors gathered at the Zhengzhou branch of the People's Bank of China to demand the government do something about the frozen assets, but the protest was violently suppressed by authorities.

After the protest, the financial regulator of Henan said deposits would be refunded, first to those with less than $7,200 in their bank accounts. This week, the regulator said those with $57,800 and $72,200 would get refunded.

"After this round of repayments, the centralized repayment work will be largely completed, and further matters will be dealt with by the four rural banks," the regulator said in a statement.

Four thousand small lenders hold around a quarter of the total assets in China's banking system, but often engage in corruption due to "opaque ownership and governance," the report said.