China’s Biggest Bank Scam Triggers Multiple Protests, Gov’t Takes Action

Renewed protest in China on Sunday, over the nation’s biggest bank scam, has forced the Chinese authorities to conclude on refunding some customers with deposit up to 50,000 yuan ($7,423), while investigation is ongoing.

The protesters were scammed by a private investment firm, Henan Xincaifu Group Investment Holding Co., alongside their employees in five banks which the firm has stake in.

Henan Xincaifu had drafted fake lending agreements in a bid to transfer customers’ deposits, and also promoted false financial products online to lure unsuspecting victims to disburse money to them.

Why Chinese government wants to pay some scammed customers?

The bank scam had triggered protests in May, last month, as well as this month. The recent protest took place at the country’s People’s Bank of China in Zhengzhou, the provincial capital of Henan, with protesters chanting “Return my money”.

And with tensions rising between the customers and authorities, following the weekend’s confrontation protest, the Chinese government decided to pay some of the lowest depositors.

This is expected to tame the risk the protest will have on the banking system and security of the country, as the protest is likely to spread panic among customers, Bloomberg reported on Tuesday.

China Merchant Securities Co. chief bank analyst, Liao Zhiming, said, “The latest move shows the local government is trying to maintain social stability by advancing a small amount of payments out of their pockets.”

Custoners with accounts in four rural banks affected in the central province of Henan and one in Anhui would be refunded, but the clients with significant amount locked away in the banks fear that they might not receive full payment of their money.