If you don’t hold it, you don’t own it: China edition.
$1.5bn from 1m customers locked after lenders operated outside their region
SHANGHAI — Protests have broken out in China after several regional banks prevented customers from making withdrawals in late April, stoking fears of a greater credit crisis without an intervention from financial authorities.
At least three institutions based in Henan Province — Yu Zhou Xin Min Sheng Village Bank, Shangcai Huimin County Bank and Zhecheng Huanghuai Community Bank — have frozen a total of 10 billion yuan ($1.49 billion) in deposits, according to Chinese reports. One million customers are believed to be affected.
All three are small, locally focused banks designed to serve rural populations. Though the People’s Bank of China in 2021 banned banks from accepting deposits outside their business areas, each institution was serving customers nationwide online.
That should’ve been a red flag for depositors.