The Chinese government promised to restore additional money to depositors in rural banks where withdrawals were barred on Friday as part of their handling of one of the worst financial scandals that led to widespread protests.
Beijing’s crackdown to control a property bubble crisis and increasing debt, which had catastrophic repercussions for the second-largest economy in the world, severely hurt the rural banking sector.
When the authorities began investigating mismanagement violations in mid-April, four banks in Henan Province barred withdrawals. This led to the detention of hundreds of thousands of depositors’ funds and the development of unauthorised demonstrations.
After the largest protest of its kind since the crisis’ inception, which featured violence, the Henan Banking Supervision Authority said that depositors with balances of up to 50,000 yuan ($7,341) will be compensated in the middle of July.
Payouts to depositors with higher assets have been gradually enhanced since that time by the banking regulators.
In a statement, Henan Banks and Insurance Corporations stated that this group of depositors will start receiving their money on August 22. They agreed on Friday to refund account holders for deposits between 350,000 and 400,000 yuan (about 51 and 58,000 USD).
Despite the fact that none of the depositors in this group had yet received their money, the statement continued by stating that (deposit amounts) less than 350 thousand will continue to be refunded.
Authorities declared a police investigation and accused the four rural banks, along with another rural bank in the province of Anhui, of taking part in the fraud operation.
Analysts claim that the Henan banking crisis has severely damaged public confidence in the Chinese financial system. The banks involved are claimed to have been operating illegally for more than ten years due to the size of the scheme.
China plans to repay further deposits made by victims of the world’s worst financial crisis in response to complaints.
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