China scrambles to defuse anger over frozen bank accounts

Hong Kong, July 18 (ANI): To address rising public anger over frozen deposits at some rural banks in the country, the Chinese bank regulator has pledged to boost capital buffers for thousands of small banks which are facing worsening balance sheets amid a weak economy and a slump in the property market.
Protests have erupted in recent weeks in central China, as thousands of depositors couldn’t access their savings at several rural banks in the region, reported CNN.
China is trying to ease panic over two of the biggest issues threatening social stability in the country–mortgage boycotts and frozen bank accounts.
The China Banking and Insurance Regulatory Commission (CBIRC) urged banks to increase loan support for real estate developers so they can complete unfinished projects, as thousands of disgruntled homebuyers are staging a mortgage boycott across the country.
In China, real estate firms are allowed to sell homes before completing them, and customers have to start repaying mortgages before they are in possession of the new property. These funds are used to finance construction by the developers.
The payment boycott comes as a growing number of projects have been delayed or stalled by a cash crunch among property developers, reported CNN.
Evergrande defaulted on its debt last year, and several other companies are seeking protection from creditors.
Home prices are also falling, putting some buyers underwater: They may be locked into a property that is now worth less than they agreed to pay, making them anguished about meeting their mortgage payments.
Buyers across 18 provinces and 47 cities had stopped making payments by last Wednesday, according to multiple state media reports and data compiled by Shanghai-based research firm China Real Estate Information Corporation, reported CNN.
The regulator pledged to work closely with local governments to ensure timely delivery of unfinished residential projects, according to a report by China Banking And Insurance News, the regulator’s own publication, citing an unnamed official from the CBIRC.
Protestors launched a mass demonstration earlier this month in Zhengzhou city, Henan province, which was crushed violently by authorities.
It was the largest protest yet by the depositors, who have been fighting for months to retrieve their frozen savings, reported CNN.
Policymakers in the world’s second-largest economy are facing mounting challenges to keep growth steady, as the country contends with a sharp slowdown in activity due to Beijing’s stringent zero-Covid policy, a bruising regulatory crackdown on the private sector, and a real estate crisis that is causing rising bad debts at banks and growing social protests. (ANI)