Original link: https://meledee.com/2022/07/4040.html
In mid-April, 4 village banks in Henan and 1 village bank in Anhui revealed the problem of difficulty in withdrawing money. More than two months later, the case is still confusing. According to incomplete statistics, the funds involved in the case are as high as 40 billion yuan. Youbo Linhai Grassland mentioned related events in the article “Term Deposits on Third-Party Platforms” . As a financial practitioner, I would like to briefly talk about this Internet deposit product and the thunderstorm incident of village banks.
What are Internet Deposit Products?
Internet deposit products were born in 2018. Many private banks and small and medium-sized local banks have launched deposit products on Internet financial platforms such as JD Finance and Lufax, taking advantage of these platforms’ advantages such as high traffic, low threshold and wide user base to acquire customers in batches. , and achieved rapid growth in deposits. Taking the five-year product “Fu X Bao”, a private bank in Chongqing that I once held, as an example, in mid-2018, the annualized rate of return after maturity was as high as 4.8%, and the principal and interest were automatically paid after maturity. Return the money to the Type II card account. At the same time, real-time withdrawals can be made at any time within 5 years, and the annualized rate of return for early withdrawals is calculated at 4.7%. Indeed, this income has beaten Yu’e Bao at the time, as well as the five-year fixed interest rate of a large number of offline bank branches.
But the disorderly development of Internet deposits has also aroused the attention of regulators. In January 2021, the China Banking and Insurance Regulatory Commission and the People’s Bank of China jointly issued a notice clarifying that commercial banks shall not conduct time deposits and fixed-life and two-convenience deposits through non-self-operated online platforms. Subsequently, the Internet platform collectively removed the Internet deposit business from the shelves, but the deposit products that had been processed before and did not mature will remain unaffected.
Are Internet deposit products really safe and reliable with “zero risk”?
These private banks and small and medium-sized local banks, with few or no physical branches at all, often use the method of “high-interest deposit solicitation” to attract depositors, and pay an expensive “drainage fee” to the Internet financial platform. These banks bear higher financing costs. Banks mainly rely on the difference between deposits and loans to make profits. In the end, high financing costs will be passed on to loan customers – raising loan interest rates. These uncertain risks will further aggravate banks’ own risks. And some small banks, through equity penetration, are basically natural person shareholders. These natural person shareholders have average qualifications and do not rely on well-known and powerful back-end companies.
Some Internet platforms have contacted customers’ personal identification information and financial information, and relevant information may be shared by the platform and banks, violating customers’ privacy, and even causing identity information to be leaked and fraudulent by telecommunications.
Internet deposit products, are they real deposit products, or are they wealth management?
Formal bank deposits in my country are protected by the “Regulations on Deposit Insurance” (except for overseas Chinese banks and foreign banks in China), and the maximum deposit principal and interest is 500,000 yuan. However, in some Internet financial platforms, the concepts of “Internet deposit products” and “bank wealth management products” are deliberately confused. “Bank wealth management products” ≠ “guaranteed principal and interest”, and bonds, stocks, wealth management, funds, trust plans Other financial products are not covered by deposit insurance.
What happened in the Henan villages and towns incident?
According to what has been disclosed, Henan New Wealth Group, through collusion with bank executives inside and outside, turned the series of village banks involved in the case into puppets, and used the bank’s formal procedures to create a “fake” deposit system. The clever thing is that the offline deposit has a debit card and a deposit receipt. However, when depositing through the online system, the funds are not deposited in the bank, but are transferred to an unregulated third-party account controlled by Henan New Wealth Group. Most of these funds are presumed to have been transferred to accounts controlled by shareholders. Only the parties involved know how to deal with them. In addition, the management of village banks at the same level and the sponsoring bank at the higher level is seriously chaotic. Shareholders are often scattered, and private capital is more involved. It is easy to generate internal management disputes and become stuck in a development deadlock.
How will the Henan village and town incident develop in the future?
These financial chaos, with complicated cases and too many chains of interests involved, cannot be characterized so far, and it is difficult to identify them as bank deposits. The ending may be the same as the thunderous P2P platform – no money to lose! In addition, the bank’s own assets are not enough to fill this sinkhole, want to use deposit insurance to cover the bottom? It may be difficult to identify and compensate.
Recently, there has even been news that many depositors who are planning to go to Henan from other provinces to ask for their hard-earned money, and even the bank customers involved in their hometown who have never left the local area, their health codes have been uniformly assigned a red code! The health code is used for pure epidemic prevention purposes. Under no circumstances should it be used by any unit or individual for purposes unrelated to epidemic prevention. For this reason, this move will seriously damage the credibility of the health code, and the relevant responsible persons will also should be severely punished.
my point of view:
“Confidence is more important than gold!” Finance itself is a game of credit. If credit is lost, more serious problems will inevitably arise. The dishonest behavior of these village banks is trampling on the entire domestic banking industry, and even the credit accumulated over the years in the entire financial system, which not only loses the face of the entire financial circle, but also makes the practitioners in it, and more ordinary people, will be sacrificed.
No matter how complicated the case is, the prevention is very simple: “You are interested in people’s high interest rates, but they want you to lose everything.” Do not deposit money in small and medium-sized banks unless it is clear that the bank has a deposit insurance system!
After the thunderstorm, I would rather lose a little interest and immediately withdraw all the five-year Internet deposit products of two private banks (Blue X Bank and Rich X Bank), and put a three-year fixed deposit in my bank. I also advise my friends not to buy investment products that you do not understand, and to choose big banks as much as possible to avoid being deceived by high interest rates.
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