A branch of China’s central bank was overran by about 1,000 hopeful borrowers as a rumor spread that it was handing out zero-interest loans, media said on Thursday, illustrating how Chinese financial know-how badly lags growth in banking products.
Police were called in on Tuesday to disperse the crowd, which had gathered for days outside the central bank in Beihai in the southern province of Guangxi, the Global Times said.
The rumor had spread that the People’s Bank of China was distributing interest-free loans of between 50,000 yuan (about N1.3m) and 500,000 yuan.
“The People’s Bank of China is a national financial regulator and does not extend deposit or lending services to individuals,” Luo Daofang, the deputy head of the Beihai office, was quoted by Beihai television as saying.
The Beihai city government was not available for comment, and the central bank declined to comment when contacted.
As China frees up its financial markets, authorities must step up education of financial products, said Zhang Zhiwei, an economist at Nomura in Hong Kong.
“I worry more about investors buying wealth management products, thinking that these are risk-free, and finding out later down the road that they are not,” Zhang said.
Growth in China’s wealth management industry has exploded in the last three years as savers search for alternatives outside low-yielding bank deposits. Sales rose by 12.1 trillion yuan in the first six months of 2012. [Reuters]