What’s new: China’s top banking regulator and central bank are paying close attention to the case of four Henan province village lenders who stopped offering online banking services, leaving nonlocal customers unable to transfer funds out of their accounts, a representative of the China Banking and Insurance Regulatory Commission (CBIRC) said Wednesday.
The Henan office of the CBIRC and the Zhengzhou sub-branch of the central bank have been instructed to work with local authorities on the matter, the representative added.
The four village banks, together with two lenders in neighboring Anhui province, have been the subject of public scrutiny since some customers complained in mid-April that they couldn’t withdraw their savings online. Many customers from wealthy southern and eastern regions deposited huge sums into these village banks for high interest rates and cash rewards, Caixin previously reported.
The police have started an investigation into one shareholder of the four banks — Henan Xincaifu Group Investment Holding Co. Ltd. — on suspected illegal deposit-taking through internal corruption, third-party platforms and money brokers, said the CBIRC representative.
The background: For over a year, China’s financial regulators have been cracking down on efforts by regional banks to take deposits from customers outside their local areas. But many local lenders still try to attract money from savers all over the country through tie-ups with online financial services platforms.
The incidents in Henan have prompted the CBIRC to ask small and midsize rural banks across the country to conduct internal reviews of their cross-regional businesses, sources in the banking industry previously told Caixin.
Read more Regional Bank Under Corruption Probe Faces More Trouble After Online Savings Accounts Frozen
Contact reporter Zhang Yukun (yukunzhang@caixin.com) and editor Bertrand Teo (bertrandteo@caixin.com)
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