(China Daily)
Updated: 2007-11-21 07:10

Premier Wen Jiabao's remarks should bring an immediate end to controversial limits on cash withdrawals ordered last week by the Shenzhen branch of the People's Bank of China.

It was reported that Premier Wen told reporters in Singapore on Monday that more effective measures and those that were acceptable to the public should be taken to curb the flow of unauthorized funds into and out of China.

This is a needed high-profile statement to clarify all the confusion resulting from Shenzhen's announcement of limits on cash withdrawals.

To the surprise of many, commercial banks in Shenzhen abruptly imposed limits on cash withdrawals for all depositors.

According to their new policies, individual depositors can withdraw no more than 30,000 yuan ($4,037) in cash per day, 50,000 yuan in a week, or 200,000 yuan in a month. For enterprises, the limit is 100,000 yuan, 200,000 yuan and 500,000 yuan accordingly.

In the absence of a bank crisis, such a restriction on cash withdrawals is simply unimaginable.

But the Shenzhen branch of People's Bank of China, the local banking authorities, explained the new rule as measures to restrict abnormally large withdrawals, reduce banks' operating costs and prevent illegal activities such as money laundering, trafficking and tax evasion.

Seemingly not convincing enough, it defended the restriction by wishfully claiming that it would not affect the lives of ordinary people.

Admittedly, those problems that the local banking authorities identified may be severe and justify prompt action. For instance, in the first nine months of this year, the net cash delivered into circulation in Shenzhen accounted for half of the national total. That is really a cause for concern.

Also, the actual inconvenience for depositors such a restriction may incur may be limited. After all, only very few people will be in need of a large sum of cash for daily legal use.

However, undeniably, the restriction goes against commercial lenders' basic obligation to their clients. After people have put money on deposit, banks are bound to provide cash withdrawal in line with agreed terms.

By recklessly breaking their promise on cash withdrawal, those commercial banks and the local banking authorities have already put their reputation at unnecessary risk.

It will only be more unwise for them to ignore the premier's suggestion.

(China Daily 11/21/2007 page10)