Chinese authorities have announced the third round of repayments for the victims of bank fraud, Reuters has reported.

Starting this week, authorities in the Henan province will make repayments to customers of four rural banks with deposits between CNY100,000 and CNY150,000.

Customers of the bank in the Anhui will also be repaid starting this week, the news agency said citing a similar statement.

Earlier this year, deposits worth around $1.5bn were frozen, which led to protests from customers and heightened concerns about the 4,000 small lenders around the country.

An investigation has revealed that Henan Xincaifu Group Investment Holding, which has stakes in the five banks in question, colluded with bank employees to commit fraud.

The banking scandal comes at a time when banks in China could lose billions from mortgages.

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By GlobalData

As per a Bloomberg report, in a worst-case scenario, lenders could take a hit of up to $350bn after threats of mortgage boycott from homebuyers for stalled property projects.

Deutsche Bank’s estimates suggest that at least 7% of home loans are at risk, the report said.

“Banks are caught in the middle,” University of Hong Kong Business School professor Zhiwu Chen was quoted by Bloomberg as saying.

“If they do not help the developers finish the projects, they would end up losing much more. If they do, that of course would make the government happy, but they add more to their exposure to delayed real estate projects.”

Last month, the China Banking and Insurance Regulatory Commission (CBIRC) urged banks to support property developers to help them complete housing projects.