The People’s Bank of China (PBoC) has decided to impose curbs on large banking withdrawals as uncertainties of bank runs and bad debts among lenders rises.
The central bank said that it would enforce withdrawal limits on large amounts of cash, for both businesses and individuals, news agency IANS reported.
China will first launch a two-year pilot project in Hebei province and later extend to other regions.
By October this year, the central bank plans to expand the pilot programme in Zhejiang and Shenzhen provinces.
These three provinces have a population of as many as 70 million people, the report added.
According to the new restrictions, banks are required to notify the central bank for withdrawals between CNY100,000-300,000 from individual banking customers.
For businesses, the limit has been capped at up to CNY500,000.
The move comes after people and businesses in the country began withdrawing their deposits as they feared the banks could go out of business.
Last year, the Chinese government seized control of several banks in the country.
Reports also emerged that many local banks have not paid back their customers when they gathered for withdrawing their deposits.
A group of depositors had gathered at Baoding Bank in the Baoding city of Hebei to withdraw their money in anticipation of the bank’s inability to pay back.
However, the bank reportedly issued a statement requesting customers to not believe in the bank runs rumours.
The Yangquan commercial bank also issued a similar statement to its depositors.