Banking inspector in Henan province under probe

BEIJING • China's banking regulator said yesterday that it is investigating an inspector at its bureau in Henan province, which has seen protests by depositors unable to retrieve funds following suspected fraud at a number of rural lenders.

The inspector is suspected of "serious disciplinary violations and is currently under disciplinary review" and has "accepted" the investigation, the China Banking and Insurance Regulatory Commission said in a statement on its website, without detailing the suspected violations.

The statement follows an announcement from regulators last Thursday about a second round of repayment to depositors whose funds were frozen due to the banking fraud.

Some deposits at four lenders in Henan and one in eastern Anhui province were frozen in what the authorities said was a complex scam involving a private financial group that had stakes in the lenders and which had faked data by colluding with bank staff and siphoned off funds illegally.

To revive depositors' confidence in the sector, the authorities in Henan and Anhui made repayments to smaller depositors starting on July 15 following investigations and arrests.

In addition to the scandal, the central government is grappling with a growing mortgage payment boycott across China in a politically sensitive year. President Xi Jinping is widely expected to secure a third leadership term at a once-in-five-years Communist Party congress.

Meanwhile, China's banking regulator last Thursday said it would help ensure projects are completed and units handed over to buyers. Some intervention has happened at the local level in Henan province, where a bailout fund was set up in collaboration with a state-backed developer to help stressed projects.

REUTERS, AGENCE FRANCE-PRESSE