Customers of three regional banks in China have prevented its customers from making withdrawals since late April leading to protests in Henan province, news agency Nikkei Asia said in a report.
The three banks - Yu Zhou Xin Min Sheng Village Bank, Shangcai Huimin County Bank and Zhecheng Huanghuai Community Bank - froze a total of 10 billion yuan equivalent to $1.49 billion in deposits.
This has affected more than a million customers.
Though the banks are small and were expected to cater to China’s rural population, each of these banks were serving customers nationwide online.
Earlier in 2021, People’s Bank of China banned banks from accepting deposits from outside their business areas.
China prioritizes a stable financial system and trouble in banks could lead to protests and unrest - which citizens are not afraid of, following the Chinese Communist Party’s crackdown on lockdown protests.
Customers living as far as Shanghai said that they were not able to access the bank’s app.
“A friend recommended the bank citing its high interest rates (but) I can’t access the app right now,” a Shanghai man who has an account in the Yu Zhou Xin Min Sheng Village Bank said. He deposited 2 million yuan through the bank’s app earlier.
The bank in April said that they would stop online banking on the smartphone app to conduct system updates.
“When I called them on April 19 to ask about withdrawing my money, they said they had no deposits in my name. The People’s Bank of China said it was already investigating the issue when I reported it,” he was quoted as saying by Nikkei Asia.
Another Guangdong Province resident said that despite a deposit insurance scheme in place he is unsure regarding getting his money citing that the deposit will not be considered legitimate.
China has a deposit insurance scheme which it launched in 2015 which guarantees up to 500,000 yuan per depositor but there are concerns that the banks do not have proper receipts.
There were also other concerns that disturbs customers. There are 1,630 of these so-called village and town banks all over China and as of 2019 they hold 1.69 trillion yuan in assets, according to the China Banking Association.
These banks also do not share their financial data on their websites or other platforms.
Customers speculate that a connection exists between the bank and the shareholders of the banks in question.
(with inputs from Nikkei Asia)
Read all the Latest News , Breaking News and IPL 2022 Live Updates here.