China rolls out strict curbs on large withdrawals after bank runs

Beijing, July 7 (SocialNews.XYZ) China is imposing checks on large banking withdrawals following fears of bank runs and rising bad debts among the lenders.

As per media reports, limits on businesses and individuals withdrawing large amounts of cash, without prior approval, will first be launched as a pilot project in Hebei province, and then extended to other regions, according to the People's Bank of China.

The new restrictions require lenders to report withdrawals of upwards of 100,000-300,000 yuan for individuals, and 500,000 yuan for businesses.

There has been mounting fear of bank runs and only last month action had to be taken to avert two bank runs. Last year, the government had seized several banks.

There are reports that many local banks have been unable to pay back customers as large number of people gathered to withdraw their deposits.

The two-year pilot programme for curbing transactions will be expanded to Zhejiang and Shenzhen province in October this year, encompassing 70 million people in three provinces.

There are reports that after a group of depositors rushed to withdraw cash, Baoding Bank in the Baoding city of Hebei province said that people should not believe in or spread rumours.

The Yangquan commercial bank also released a similar statement after the depositors rushed to the local branches in anticipation of the bank's inability to pay back.

Source: IANS