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China announces 234 arrests in provincial banking scam

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Bank depositors protest in Chinas Henan province
Bank depositors protest in China’s Henan province

Chinese authorities have announced the arrests of 234 people involved in the financial scandal surrounding several rural banks in Henan province, local media reported on Monday.

According to the Xuchang city police, significant progress has been made in retrieving capital and recovering the losses, China Daily reported.

In early July 10, more than 1,000 depositors gathered outside the Zhengzhou branch of the country’s central bank, the People’s Bank of China, to launch their largest protest yet.

The incident comes in the light of the Henan branch of the Bank of China declaring that people’s savings in their branch are ‘investment products’ and can’t be withdrawn, according to the media report.

The investigation by the public security bureau of Xuchang has found that the criminal gang led by the suspect Lyu Yi illegally controlled four rural banks, including Yuzhou Xinminsheng Village Bank, and the gang is suspected of carrying out a series of serious crimes

The police said in addition to the normal deposit interest, the criminal gang used part of the illegally obtained funds to attract more funds with an annual rate of return of 13 to 18 per cent as bait for an “interest subsidy” standard, as per China Daily. 

The “interest subsidy” was exploited by the money brokers layer by layer, and was obtained by some large fund clients.

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