Henan Bank depositors hit by red health codes
People who arrived in Zhengzhou to withdraw cash from beleaguered regional banks said they saw their health codes turn red – a label primarily reserved for potential COVID-19 carriers or people infected with the virus – after their arrived in the provincial capital of Henan province, prohibiting them from accessing transport networks, public services, and even going to banks to file their grievances.
Thousands of depositors attempted to withdraw cash in person from at least four of Henan’s regional banks with tens of billions of yuan in deposits frozen since April. The move came after Sun Zhenfu, a shareholder in one of the banks, fled following “serious financial crimes” in March, according to media reports.
Banks holding deposits include Yuzhou Xinminsheng Village Bank, Zhecheng Huanghuai Community Bank, Shangcai Huimin County Bank and New Oriental Country Bank of Kaifeng, with Sun apparently having indirect associations with each of them. Some 1 million customers would be affected.
At least 12 applicants Sixth Tone spoke to said their health codes turned red when they scanned city-specific QR codes at train stations, hotels and other places that needed them. China tracks residents’ locations with state and local health apps as part of its COVID control measures, which limit mobility when codes turn yellow or red.
Many depositors said they traveled from the eastern provinces of Zhejiang and Shandong, as well as Hebei in the north, to Zhengzhou to demand answers and attempt to recover their deposits.
Wang Jin, from Zhangjiakou in Hebei, is one of them. The 35-year-old said he came to Zhengzhou hoping to collect his savings from the Yuzhou Xinminsheng Village Bank on Sunday, but ended up at the police station until the next day when his health code turned red while scanning a QR code to get out of town. station.
He had last checked his health code 30 minutes before arriving in Zhengzhou, and it was still green at that time.
“The police confirmed that the frozen money was a legitimate deposit, but prohibited us from going to the local banking and insurance regulatory commission to inquire about the issue,” Wang told Sixth Tone on Monday after- midday. “We have reasonable and legitimate complaints, but they used code red as a reason to restrict us. They said our health codes will turn green when we leave, and until then we have to stay at the police station.
All four banks are still open for business and some of them with smaller deposits were able to withdraw money from the bank, even though ATMs were not working, depositors told Sixth Tone.
A depositor from the eastern city of Ningbo with more than 10 million yuan ($1.5 million) in savings said he visited the New Oriental County Bank in Kaifeng on Sunday. His health code was then already red and the man was accompanied by six police officers. He couldn’t withdraw any money.
Several commercial and rural banks, as well as cooperatives, across China began offering fixed deposit products after the country enacted its deposit insurance scheme in May 2015. An insurance foundation was established to that depositors be paid up to 500,000 yuan if a bank files a case. bankruptcy, which attracted many customers because it guaranteed the security of savings.
The four financial institutes whose funds are frozen are small local banks designed to serve rural populations. But they had expanded their online reach nationwide with the help of fintech platforms such as JD Digits, backed by e-commerce giant JD.com, and internet giant Baidu’s Du Xiaoman Financial. . Smaller platforms such as Binhai Financial and Wacaibao were also involved.
Banks have attracted customers with higher interest rates on term deposit products. In term deposits, customers agree to leave their money in the bank for a certain period of time in exchange for higher interest. These banks paid about 4.3% on term deposits that can be rolled over for up to five years, according to receipts provided by depositors.
By contrast, the Industrial and Commercial Bank of China, one of China’s “big four” public lenders, offers just 3.15% annual interest on a five-year deposit product.
But in January 2021, Chinese banking and insurance regulators banned all banks from offering long-term fixed deposits on third-party fintech platforms, saying “banks need to improve their risk estimation and management.” Authorities said some smaller and regional banks were using large sums of money raised on internet platforms to provide loans to insufficiently qualified local businesses.
Since then, JD Digits and Du Xiaoman have removed all interest-bearing term deposit products from their apps. But the four Henan-based banks directly reached out to their existing customers and convinced them to download the banks’ apps in order to deposit even more money, according to screenshots of text messages provided by depositors Sixth Tone has partnered with. is maintained.
After news spread that the four banks were not releasing their customers’ deposits, hundreds of customers traveled to Zhengzhou hoping to get more information. On May 23, about 800 depositors went to the local banking and insurance regulatory commission but were sent back to their hometowns by local police, a depositor from northern Shanxi province who participated told Sixth Tone. to protest sit-ins.
At that time, the People’s Bank of China had already said that “relevant departments have launched investigations” into the four banks. In an April 25 statement, the central bank said it will “cooperate with relevant departments to protect the legitimate rights and interests of financial consumers in accordance with law.”
Weeks later, many applicants are still waiting for concrete answers from the authorities. And those who decided to go to Zhengzhou and demanded measures said that some public health protection measures were used against them instead.
“It uses the country’s epidemic prevention policy to prevent people from seeking justice for themselves,” Wang said, referring to the health code. “Our family’s 420,000 yuan is now frozen, almost all of our savings. I need money urgently, my parents need medicine, my two children have to go to school and the family has a big financial burden.
Wang is now back in his hometown of Zhangjiakou after police officers brought him back Monday night. Around midnight, while he was on the train and almost home, his health code turned green.
Publisher: Bibek Bhandari.
(Header image: People gather at a branch of Yuzhou Xinminsheng Village Bank after finding they cannot withdraw money, Yuzhou, Henan province, 2022. According to Weibo)