Recently, thousands of depositors of village banks in Henan and Anhui were unable to withdraw million dollars. According to Chinese media outlets, the incident was suspected of being an illegal scam to take people’s deposits. 

In addition, an industry insider also revealed the reason behind the incidents that depositors couldn’t withdraw funds. 

The first major shareholder of the other four village banks mentioned above is Xuchang Rural Commercial Bank. In addition, the shareholder behind the four banks is Henan Xincaifu Group Investment Holding Co. 

As reported by Sina, following a recording of a call between depositors and police officers, the Henan Xincaifu Group Investment Holding Co. was suspected of illegally absorbing public deposits.

The China Banking and Insurance Regulatory Commission said in a written response that after investigation, Henan Xincaifu Group Investment Holding Co. colluded with bank employees to engage in illegal wealth collecting activities using online platforms. The firm is a major shareholder in all four banks. 

Sina cited an insider that the amount of illegal funds was large.  According to Sina Finance, more than 2,900 people have registered their separate deposit amounts as of May 7, totaling more than 1.2 billion yuan (180 million dollars). 

 According to this insider, the incident involved not only illegal funds but also online fraud. At present, the bank closed the withdrawal portal because it could not identify illegal funds and legal funds. Therefore, they applied emergency measures. 

Regarding the incident in which some depositors received messages that their bank account didn’t receive, the insider said that  the electronic account was not opened at the counter. He said that banks reserved information in the system but it couldn’t be found at the counters. 

According to the depositors, the four Henan banks that depositors could not withdraw their money from were: Yuzhou New Minsheng Village Bank, Shangcai Huimin Village Bank, Zhecheng Huanghuai Village Bank, Kaifeng New Oriental Village Bank.

A number of banks issued announcements that online and mobile banking services would be suspended due to system upgrades and maintenance.

For example, on April 25, the Xuchang Municipal Government replied on the official website that “Yuzhou Xinminsheng Village Bank cannot withdraw money online”. They said that the bank was upgrading and optimizing the online channel system to effectively block the frauds. 

Some depositors rushed to the area, but were also unable to complete their withdrawals.

According to the insider, it will take longer for authorities to categorize  legal and illegal funds because of the criminal cases. He is not  sure when the depositors would be able to withdraw their money.

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