Beijing [China], August 2 (ANI): Chinese banks might lose over USD 300 billion as the country continues to grapple with an economic slowdown and a housing crisis increasing the lack of confidence in the financial system among citizens.
Chinese bank depositors, who are protesting against their inability in getting their frozen funds back, are now boycotting the mortgage payment which in turn is increasing the non-performing assets (NPA) of the banks giving a major blow to the country's economy.
China Evergrande Group, one of the largest property developers in the country by sales had promised to release an initial restructuring plan by the end of July, according to The Wall Street Journal.
As of June 2021, Evergrande had more than USD 300 billion in debt and other liabilities, such as unpaid bills to suppliers. It defaulted on its dollar bonds in December, after months of liquidity problems, it reported further.
There is a deep slump in the country's property market. China's ailing property market is one of its biggest economic headaches and Chinese authorities have been involved in trying to defuse risks at Evergrande.
Notably, numerous Chinese citizens are boycotting mortgages because they are not getting possession of their accommodation units on time.
Over 230 house owners across 86 cities refused to make mortgage payments for unfinished, pre-sold units unless construction resumes, according to Github.
Mortgages worth over 2 trillion yuan are currently stalled at Chinese housing sites.
The primary cause behind the housing crisis is that house buyers are not confident and don't trust that their housing units will be completed.
The housing sector is an essential sector of the Chinese economy as new home purchases constitute over 80 per cent of China's property industry.
Hundreds of disgruntled bank customers in China have been protesting for the last two months as their accounts were frozen by four rural banks in the central province of Henan and one in Anhui, reported Financial Post.
Chinese bank scams pose threat to public confidence in the financial system. The bank scam is not an isolated or alone event or the first time in China. Bank scams are happening in China.
Despite strict regulations, the country has 4,000 small and medium-sized lenders that collectively control about USD 14 trillion in assets.
However, confidence in these banks has waved since 2019, when the government seized a lender for the first time since 1998 and imposed losses on some creditors.
The Chinese authorities are already grappling with shaken confidence of people in its financial system, such occurrences are only aggravating the prevailing lack of confidence. (ANI)