Banking inspector in China’s Henan province under scanner after fraud case, protests

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China’s banking regulator on Sunday said 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.

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The statement follows an announcement from regulators on 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 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 siphoning off funds illegally.

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

In addition to the scandal, the central government is also grappling with a growing mortgage payment boycott across the country 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.

Read more: China plans three-tier data strategy for companies to avoid US delistings: FT

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