More than 230 people have been arrested in China for their ‘involvement’ in the rural banking scandal that rocked the country’s financial system and brought thousands of small depositors to the street.

Four rural banks in central China’s Henan province were hit by China’s worst financial scam.

A criminal gang, headed by Lu Yi, illegally took control of four rural banks, including Yuzhou Xinminsheng Village Bank, and are suspected of committing a series of severe crimes,” the public security bureau in the city of Xuchang said, according to a report in South China Morning Post.

The gang lured depositors with annual interest rates of 13-18 per cent, police said, without offering details but added that efforts are underway to recover the lost ‘deposit’ money.

The arrests are the latest in a huge financial scandal that has left thousands of depositors across the country without access to tens of billions of yuan in frozen funds, igniting months-long protests, the Hong Kong daily said.

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In one case in June, authorities in the provincial capital of Zhengzhou tried to quell protests by assigning a red health code to the depositors.

Red codes designate people who have been to areas with reported cases of Covid-19 and prevent them from travelling, checking into hotels and entering any public buildings.

Demonstrators who defied the red code to protest were beaten by thugs, taken away by local police and sent home. Five officials and civil servants in Zhengzhou were later fired or punished for abusing the health code system.

Faced with growing discontent, authorities began to repay depositors from mid-July, starting with those who had less than 50,000 yuan (US$7,227) at the affected banks. The government incrementally rolled out repayments for those with higher deposits.

Over 8,100 officials punished for violating disciplinary rules

As many as 8,185 Chinese officials were punished in July for violating the country’s eight-point code on improving Party and government conduct, a media report said quoting the country’s anti-graft body.

These officials were involved in 5,434 cases, and 5,626 of them were handed down penalties, said the Communist Party of China (CPC) Central Commission for Discipline Inspection and the National Supervisory Commission in a monthly report.

A total of 4,007 were sanctioned for engaging in bureaucratism or formalities for formalities’ sake. Dereliction of duty in social and economic development and environmental protection was a prominent problem in this regard, according to the report.

A total of 4,178 officials were punished for hedonism and extravagant conduct, including giving or accepting gifts and awarding unauthorized allowances or bonuses.

In late 2012, the CPC released its eight-point rules on frugality to combat undesirable work practices.###