Regulator vows to settle rural banking malfeasance issue

China’s banking regulator said on Thursday that relevant work regarding some village banks, in which depositors found that they could not withdraw their cash, is making steady progress.

After the incident of the five rural banks in Central China’s Henan Province and East China’s Anhui Province, the banking regulator stated multiple times that it would strictly abide by laws and regulations, take facts as the basis and take the law as the criterion for handling the issue, the China Banking and Insurance Regulatory Commission ( CBIRC) said on Thursday.

The comments came during a press conference to explain the development of the banking and insurance industries in the first half of 2022.

Four rural banks in Henan and one in Anhui were recently in the spotlight, with depositors finding that they could not withdraw their expired savings, starting from April 18.

An initial police probe on June 18 indicated a scam was behind the case.

The CBIRC noted that the local financial regulators in Henan and Anhui will start the second round of advance payments for depositors, who have reported difficulty in withdrawing money from local village banks, from July 25.

The clients in this second round of advance payments will be customers initially with combined deposits in the related banks of no more than 100,000 yuan ( 14,788) apiece, according to announcements by the Henan Office and Anhui Office of the CBIRC on Thursday.

In terms of the proportion of depositors with assets under 100,000 yuan out of all bank clients, Qi Xiang, spokesperson and director of Regulation Department of the CBIRC, said on Thursday at the press conference that in order to ensure the authenticity of information, the two provinces have set up a new customer information registration system, and are doing customer registration work.

The spokesperson said that the banking and insurance industries performed steadily in the first half of the year, and the ability to fend off financial risks continued to improve.

Banks have played an important role in the housing sector for both property developers and homebuyers.

The regulator will work with the People’s Bank of China to lower the floor of interest rates on first- time home loans by 20 basis points and guide banks to speed up mortgage loan approval, which has reached the fastest pace since 2019, CBIRC said. Qi also noted that the CBIRC will adhere to the principle that “houses are for living, not for speculation.”

Assets held by China's small and medium- sized banks totals 96 trillion yuan, accounting for 29% of national total, according to CBIRC.