What’s new: The main banking regulator and the central bank of China pay close attention to the case of four village lenders in Henan province who stopped offering online banking services, preventing non-local customers from transferring funds from their accounts, a representative of the China Banking and Insurance Regulatory Commission said on Wednesday. (CBIRC).

The CBIRC’s Henan office and the central bank’s Zhengzhou sub-branch have been instructed to work with local authorities on the issue, the representative added.

The four village banks, along with two lenders in neighboring Anhui province, have come under public scrutiny since some customers complained in mid-April that they could not withdraw their savings online. Many customers from wealthy southern and eastern regions have deposited huge sums in these village banks for high interest rates and cash rewards, Caixin previously reported.

Police have opened an investigation into a shareholder of the four banks – Henan Xincaifu Group Investment Holding Co. Ltd. – on suspicion of illegal deposit through internal corruption, third-party platforms and money brokers, the CBIRC representative said.

The background: For more than a year, Chinese financial regulators have been crack down on the efforts of regional banks to receive deposits from customers outside their geographical area. But many local lenders are still trying to attract money from savers across the country through links to online financial services platforms.

The incidents in Henan prompted the CBIRC to ask the country’s small and medium-sized rural banks to conduct internal reviews of their cross-regional operations, banking industry sources previously told Caixin.

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Regional bank under corruption probe faces more trouble after online savings accounts frozen

Quick Takes are condensed versions of China-related stories for quick news that you can use. To read the full story in Chinese, click here.

Contact reporter Zhang Yukun ([email protected]) and editor Bertrand Teo ([email protected])

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