Shenzhen banks ordered to lift restrictions on cash withdrawals

Shenzhen banks yesterday were ordered to lift restrictions on cash withdrawals, a day after Premier Wen Jiabao said the controversial tactic designed to slow the flow of illicit funds into Hong Kong was inappropriate.

Spokesmen from the Shenzhen Development Bank, China Merchants Bank and Citic Bank confirmed they had received notices from the People's Bank of China in Shenzhen to cancel the limits.

Mr Wen on Monday said he disapproved of Shenzhen lenders limiting depositors' access to their own money, saying there were other methods to prevent the flow of underground cash.

Mainland media earlier this month reported the PBOC branch had directed the city's commercial banks to limit cash withdrawals by individuals to 30,000 yuan a day, 50,000 yuan a week and 200,000 yuan a month. Companies also faced cash restrictions.

The move aimed to stem a flood of illicit and speculative cash, estimated in the billions of yuan, into Hong Kong's stock and property markets.

Industry sources said the central bank in Shenzhen had discussed Mr Wen's remarks on Monday night and decided to lift the cash withdrawal limits.

Guo Shiping, a director of the international finance research institute at Shenzhen University, said the fact the withdrawal caps had been cancelled did not mean the central bank would loosen its controls on cash flow.