Rural banks in China freeze savings of depositors amid cash crisis

Chinese authorities clamped down on a peaceful protest by bank customers whose life savings have been frozen by rural lenders in China's central Henan province.

A group of over 1,000 protesters held a demonstration in front of the Zhengzhou sub-branch of the People's Bank of China to recover their frozen deposits on Sunday.

The rare protest was violently dispersed by the local authorities. Security personnel dressed in plain white t-shirts were seen pushing protestors, and in some cases hitting them.

This comes after a large number of depositors caused a bank run when they tried to withdraw their savings from four rural banks in the Henan province in April.

Depositors have staged several agitations in Zhengzhou over the past two months after the New Oriental Country Bank of Kaifeng, Zhecheng Huanghuai Community Bank, Shangcai Huimin County Bank, and Yuzhou Xin Min Sheng Village Bank froze customers' savings.

Some protesters last month found that their personal health codes have been tampered with on the country's Covid-19 tracing app, which is mandatory for almost all Chinese citizens to access public places.

If this status on the app turns red, it means the person has tested positive for Covid-19 recently or is suspected to have the coronavirus, and must be quarantined for 14 days.

The violent face-off on Sunday lasted several hours as security forces clashed with protestors who threw bottles at them, according to social media videos.

To quell protests, Henan's banking and insurance regulator on Monday said bank customers will start getting some of their money back. Individual customers with deposits of up to 50,000 yuan ($7,442) will be repaid starting Friday, the regulator said. The arrangements for repaying others will be separately announced, it said.

The Henan banking regulator issued a statement, saying "relevant departments" were speeding up efforts to verify information on customer funds at the four rural banks.

"(Authorities) are coming up with a plan to deal with the issue, which will be announced in the near future," the statement said.

Henan police said in a statement late Sunday they recently arrested members of an alleged "criminal gang," who were accused of effectively taking control over the Henan rural banks starting from 2011 and "manipulating banks executives."

The suspects were also accused of illegally transferring funds through fictitious loans, the police said, adding that the "investigation of the case is being carried out in an orderly manner".