Abstract:
According to 21st Century Business Herald reporters' multi-party verification of 15 regional private banks, as of October 20, 14 institutions have explicitly suspended or restricted personal off-site deposit-related businesses. This rectification is the implementation of the localization requirements of supervision. The existing business will not be immediately affected and all disposals must be completed before the end of 2027 according to the supervision schedule.
The 14 private banks involved in the rectification include: Shanghai Huarui Bank, Tianjin Jincheng Bank, Wenzhou Commercial Bank, Chongqing Fumin Bank, Hunan Sanxiang Bank, Fujian Huatong Bank, Weihai Blue Ocean Bank, Beijing Zhongguancun Bank, Meizhou Merchant Bank, Jiangxi Yumin Bank, Jiangsu Sushang Bank, Anhui Xin'an Bank, Wuxi Xishang Bank, and Liaoning Zhenxing Bank. Among the 15 banks, Wuhan Zhongbang Bank was taken over by the State Financial Supervision Administration in accordance with the law in July this year due to serious credit risks. Hankou Bank took over its relevant assets, liabilities, business and personnel in accordance with the law and regulations. Four national online private banks, WeBank, MYBank, Xinwang Bank and Yilian Bank, are not within the scope of this rectification.
This rectification has set differentiated requirements for different types of accounts. Existing customers who already hold a Class I bank card can continue to use it normally; customers from other places who have not opened a Class I account must open an account at a bank's offline branch before making a deposit; users of Class II cards who open accounts through online channels must implement the clearly regulated "choose 3 from 5" local customer criteria, that is, only if 3 of the 5 pieces of information including ID address, permanent residence, main business place, mobile phone number location, and device location belong to the bank's operating area, can they be recognized as local customers.
Judging from the implementation of the bank, Wuxi Xishang Bank issued an announcement in September, clarifying that the personal deposit business is only open to local customers in Jiangsu Province. Category II accounts opened online need to meet 3 of the 5 pieces of information. Customers who cannot handle it on-site can wait until mid-October. Supplementary information on the "localized authentication" system launched in October; Liaoning Zhenxing Bank has directly launched a local verification pop-up window during the account opening process, and non-Liaoning users cannot complete account opening; Meizhou Merchant Bank stated that it is advancing the implementation of the "5-choose-3" standard in an orderly manner and plans to fully complete it on January 1, 2027.
Supervision clearly requires "natural digestion" rather than "forced liquidation" of existing off-site deposits. Relevant banks are not allowed to add new off-site deposit businesses, and all existing off-site deposits must be settled before the end of 2027. Extending the maturity date through extension, restructuring, etc. is not allowed. For depositors, the principal and interest of deposited off-site funds will not be affected, and they can be held normally until maturity and redeemed as agreed; if they are not recognized by local customers after maturity, they will not be able to add new deposits. If customers from other places still need deposits, opening a Class I account at a physical outlet is currently a regulatory-recognized compliance path. Accounts opened at outlets are usually recognized as local deposits and are basically not subject to geographical restrictions.
This rectification can be traced back to January 2021. The former General Office of the China Banking and Insurance Regulatory Commission and the General Office of the People's Bank of China jointly issued the "Notice on Matters Related to Regulating Commercial Banks' Personal Deposit Business Through the Internet" (Chinese Banking and Insurance Regulatory Commission [2021] No. 9), which clearly requires local legal person commercial banks to conduct personal deposit business through the Internet. The deposit business carried out online must be based on serving customers in the area where the institution has been established. At the same time, the central bank defined the concept of off-site deposits in the monetary policy implementation report, and included the situation of local corporate banks absorbing off-site deposits into the scope of macro-prudential assessment (MPA) assessment. In July 2026, local commercial banks and private banks received regulatory guidance to clarify the "choose 3 from 5" local customer identification standards and implement localization requirements from principled constraints to enforceable penetrating verification.
Tian Lihui, a professor of finance at Nankai University, said that there are two core motivations for this round of rectification: first, to maintain fair order in the deposit market. Previously, some regional private banks used cross-regional high interest rates to obtain deposits, distorting regional deposit pricing and squeezing the normal operating space of local small and medium-sized banks; second, blocking the cross-regional transmission of financial risks. If depositors are spread across the country, the radius and difficulty of disposal after risk exposure will far exceed the capabilities of local supervision. This rectification is essentially to re-converg the risk externalities of local corporate banks to within the scope of the regulatory area.
Lou Feipeng, a researcher at the Postal Savings Bank of China, pointed out that this rectification has blocked the regulatory arbitrage space for cross-regional online savings, prevented cross-regional concentration of funds and risk mismatch, promoted the return of regional private banks to the business positioning of serving the local real economy, and ended the old model of some private banks relying on cross-regional high interest rates to attract deposits and offsets. The industry will shift to localized and stable operations.
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