Depositors are panicking as China's small banks in trouble amid corruption allegations
Small banks in China are running into trouble as they are accused of crimes, bad loans and excessive risk, due to the failure of Xi Jinping's zero Covid policy.
Small banks in China are running into trouble as they are accused of crimes, bad loans and excessive risk, due to the failure of Xi Jinping's zero Covid policy. Peter, a depositor, who had put his life savings of about USD 6 million into accounts at three small banks in China's Henan province, said that he hasn't been able to access them since April, CNN reported.
"I'm close to having a nervous breakdown. I can't sleep," CNN Business quoting Peter reported. Apart from Peter, thousands of depositors have been fighting to recover their savings from at least six banks in rural provinces in central China.
Last year, China Bohai Bank, a national joint-stock commercial bank, has been accused of secretly using a client's USD 438 million in deposits as collateral. The accusations came from 'Jiangxi Jemincare Group Co' enterprise, which informed that its deposits in Bohai Bank were secretly used as collateral by the bank for a petrochemical company in Nanjing, a local media had reported.
According to media reports, four banks in Henan suspended cash withdrawals in April this year. Local banks in China are only permitted to obtain deposits from their home customer base, but authorities said that "third-party platforms" were used to acquire funds from depositors outside the region.
The national banking regulator has accused a major shareholder of the four banks of illegally attracting money from savers. "Henan New Fortune Group, a shareholder of the four village banks, has illegally absorbed the public's funds through internal and external collusion, the use of third-party platforms, and fund brokers," the China Banking and Insurance Regulatory Commission told state-run Xinhua News Agency in May.
Runs on small Chinese banks have become more frequent in recent years and some have been accused of financial improprieties or corruption, CNN reported. Experts raised concern as the bigger financial problem could be looming, caused by fallout from a real estate crash and soaring bad debts related to the COVID-19 pandemic.
At least 400,000 banking customers across China were unable to access their savings, according to an estimate in April by Sanlian Lifeweek, a state-owned magazine cited by CNN. (ANI)
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)