Police in Xuchang city of Henan province arrested 234 suspects tied to the nation’s largest ever bank fraud and started repaying more victims of the $5.8 billion scam. The arrest came a month after hundreds of depositors protested over their lost savings in one of the largest demonstrations the country has seen since the pandemic began. CNN today reported that the authorities allegedly made “significant progress” in recovering the stolen money.
Police have said that a criminal gang led by suspect Lv Yi illegally controlled four rural lenders, including Yuzhou Xinminsheng Village Bank, offering rates as high as 18% to attract funds that officials say amounted to 40 billion yuan ($5.8 billion). About a quarter of the total assets in China’s banking system are held by around 4,000 small lenders, which often have opaque ownership and governance structures and are more vulnerable to corruption and the sharp economic slowdown.
Since April, four rural banks in China’s central Henan province have frozen deposits worth millions of dollars. In July, more than 1,000 depositors gathered outside the Zhengzhou branch of the People’s Bank of China to protest. The peaceful demonstration was crushed violently by authorities.
Following the protest, Henan’s financial regulator initiated repayments. The first payments were sent to bank customers with a combined total of less than 50,000 yuan ($7,200) deposited at a single bank. On Monday, the authorities said they would launch another round of repayments to customers, this time focusing on those with deposits of between 400,000 yuan ($57,800) and 500,000 yuan ($72,200). Depositors who have lost more would receive an initial sum of 500,000 yuan, with the remainder reserved for now, according to the regulators.
