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On May 12, 2008, the Wenchuan earthquake shook Chinese mainland, leaving unimaginable destruction and profound human tragedy. The earthquake claimed 80,000 lives and plunged countless lives into the abyss. As the dust settles, a pressing and complex question emerges: What to do with the bank deposits and outstanding loans left behind by the victims?
Widespread devastation from earthquakes
The Wenchuan earthquake struck on May 12, 2008, and its powerful shaking and continuous aftershocks brought unprecedented damage to western China. Although the epicenter was located in Wenchuan County, Sichuan Province, the strong tremor was quickly felt in the vast western region, and even Shanghai, Tibet, Taiwan and Hong Kong, thousands of miles away, felt a noticeable shaking.
In Sichuan Province, the impact of the earthquake was particularly severe. Many buildings in Chengdu, Dujiangyan and other cities collapsed or were severely damaged by the earthquake, and dust flew and ruins piled up. There were a large number of cracks and fractures in the roads, and traffic was completely paralyzed. To make matters worse, landslides and mudslides triggered by the earthquake have blocked many roads leading to the affected areas, severely hampering rescue operations.
At the moment of the earthquake, many buildings collapsed like houses of cards. Schools, hospitals, apartment buildings, and many government office buildings were destroyed in the tremors, and countless people lost their lives or homes in this instant. In some of the hardest-hit areas, such as Beichuan County, almost the entire county was razed to the ground, and survivors sought refuge in the rubble.
Outside of Sichuan, provinces such as Gansu and Shaanxi, serious building damage and casualties have also been reported. Most of the schools and public facilities in the areas where the earthquake was felt were damaged, and emergency evacuation became a priority.
In Shanghai and Hong Kong, although there was no large-scale building damage, many residents and office workers of high-rise buildings felt the obvious shaking and evacuated to open areas outside in panic. The impact of the earthquake was so widespread that the power of the disaster was felt throughout the country.
According to official statistics, as many as 237 counties and cities were affected, covering an area of up to 500,000 square kilometers. In this vast area, countless rescue teams and volunteers began a long rescue and assistance operation. Rescue vehicles, medical teams, and construction machinery have been assembled in the disaster area under the coordination of governments at all levels.
With the activation of the national emergency response system, the military and civilian rescue teams were quickly mobilized. PLA officers and medical teams shuttled through the worst-hit areas, using life-detection equipment and dogs to search for survivors, while setting up makeshift tent hospitals to provide emergency medical assistance to the injured. In some areas cut off by landslides, helicopters have become the only way to deliver relief supplies.
The impact on the victims and their families
About 80,000 people were killed in the Wenchuan earthquake, a number that shocked the entire country. As rescue teams descend into the affected areas, every body exhumed from the rubble is carefully disposed of, ensuring respect for the last dignity of each victim. In some of the hardest-hit areas, temporary resettlements have been set up to place recovered bodies pending identification and final identification by family members.
Government departments, including the Civil Affairs Bureau and the Public Security Bureau, coordinated their efforts to speed up the process of identifying the victims. Subsequently, the government released an official list of those killed for verification by family members. At the same time, in order to solve the property and legal problems caused by the disaster, legal aid and consultation points have also been set up at various reception centers and rescue points to provide free services to help disaster victims with legal matters such as inheritance.
Financial institutions, under the guidance of the People's Bank of China and the China Banking Regulatory Commission, acted quickly to ensure that the financial problems of the victims' families were properly addressed. First of all, major banks have set up special windows to deal with banking business related to the victims, including deposits, loan settlements, etc. In view of the fact that the loans of the victims have not been settled, financial institutions have decided to suspend repayment of loans to the victims in the hardest-hit areas, or even forgive some debts, in order to alleviate the economic burden of the residents in the disaster-stricken areas.
Insurance companies began to pay out to the insured victims. They sent a special team to the disaster area to understand the specific losses of insurance customers and ensure that every insurance payment is fair and timely. For those who have life insurance, the insurance company will contact the families to simplify the claim process and release the compensation as soon as possible.
In addition, the civil affairs department was involved in assisting the families of the victims by providing a one-time pension. These funds are intended to directly support the families of the victims, especially those who have lost their breadwinners, to help them recover from the hardships of life as soon as possible. Special funds have also been set up at all levels of government to support the reconstruction of the affected areas and the recovery of the lives of the population.
Inheritance treatment of bank deposits
In the 2008 Wenchuan earthquake, many people lost their lives suddenly, leaving behind a series of unresolved property issues. In particular, the processing of bank deposits and loans has become a pressing issue. According to China's Inheritance Law, an individual's deposit in a bank is personal property, not an asset of the bank or the state, but an individual depositor. After the death of the depositor, these funds are converted into an estate and enter the statutory inheritance process.
The process for dealing with these legacy issues is clear. If the deceased made a will during his lifetime and it was notarized, then his deposit will be inherited according to the heirs named in the will. However, many victims are unable to leave a will due to sudden disasters, in which case the estate needs to be disposed of in accordance with the legal order of succession.
Banks play a key role in this process. For the deceased who has been confirmed to have an heir, the bank requires the heir to provide the deceased's death certificate and relevant kinship certificates, such as household registration booklet, ID card, etc. Once these proofs are verified, the deposit can be smoothly transferred to the heirs.
The situation is more complicated if both the depositor and the legal primary heir are killed in a disaster. At this time, the inheritance of the deposit will pass to the next legal heir, such as spouse, child, or parent. If the heirs include minors or members who are unable to take care of themselves, the process will involve more legal formalities to ensure the legal and fair distribution of the property.
The situation is even more complicated for those who have no clear heirs. According to the law, these estates should be inherited by relatives such as spouses, children, parents, etc., in accordance with the legal order of succession. If left unclaimed for a long time, or without a clear legal heir, the estate will eventually go to the state and may be used for post-disaster reconstruction or other public welfare causes.
For those who died in a collective-owned unit, their savings and property may belong to the unit if they do not leave behind a personal heir. The disposition of each estate must be carried out in strict accordance with the law to ensure that the property of each deceased person is properly managed and used.
In post-disaster reconstruction, the rational disposal of these assets is not only related to the basic living needs of the victims' families, but also related to social justice and the seriousness of the law. Dealing with these legacy issues requires time, energy, and legal and ethical considerations to ensure that the law is followed while respecting the wishes of each victim during their lifetime.
The specific implementation of financial policies
In the aftermath of the disaster, an important economic question emerged: what to do with those houses and buildings with bank loans, if the borrower was killed? Typically, the loan is repaid by the heirs of the deceased's property. However, the devastating effects of earthquakes and the chaos of socio-economic structures have made this traditional approach a major challenge.
In response, on May 19, 2008, the People's Bank of China and the China Banking Regulatory Commission jointly issued the Urgent Notice on Making Every Effort to Provide Financial Services in the Earthquake-stricken Areas. The circular clearly pointed out that banking financial institutions must fully consider the actual situation of the people and enterprises in the affected areas and adopt flexible loan repayment strategies.
In particular, the circular stipulates that banks shall not take collection measures, impose penalty interest, or record them in bad credit records for individuals and entities that are unable to repay loans on time due to earthquake disasters. The aim of these measures is to ease the financial burden on the affected people and ensure that they can focus on rebuilding their homes instead of being overwhelmed by financial pressures.
With the implementation of this policy, banks have shown a high degree of flexibility and humanity in dealing with loans in disaster areas. For example, banks in one area have set up special desks to provide advice and assistance to people affected by disasters. These windows not only handle regular banking operations, but also help the families of the victims with inheritance issues, ensuring that they can seamlessly take over the financial responsibilities of the victims.
Further, the bank is working with local governments to ensure that all disaster relief loans are disbursed quickly. This includes offering preferential interest rates on loans to rebuild homes and even interest-free loans in some cases. These measures have greatly helped those families and businesses that are strapped for money, allowing them to start rebuilding in the shortest possible time.
On May 23, 2008, the China Banking Regulatory Commission (CBRC) issued an instruction on the write-off of bad debts in the banking industry
On May 23, 2008, the eleventh day after the earthquake, the China Banking Regulatory Commission (CBRC) responded quickly by issuing the Urgent Notice on Writing Off Bad Debts in the Banking Industry Caused by the Wenchuan Earthquake in Sichuan. The notice provides specific relief measures for borrowers who have suffered huge losses due to the earthquake.
The notice pointed out that after the earthquake, many of the affected people's homes were destroyed and their property was severely damaged, and the insurance coverage was not enough to cover all the losses. In this regard, the Banking Regulatory Commission requires all financial institutions to treat the loans of these borrowers in accordance with the newly revised Administrative Measures for the Write-off of Bad Debts of Financial Enterprises. This means that if the borrower suffers significant losses in the earthquake and cannot be adequately compensated by insurance to repay the loan, the financial institution needs to remove the loan from the accounts and no longer hold the borrower accountable.
The specific implementation steps of the write-off work have also been clarified in the notice. First of all, banks need to organize a special team to go deep into the disaster area to conduct on-the-spot investigations to assess the actual losses and repayment ability of borrowers. After verifying the information, the bank will negotiate with the borrower to decide on the write-off ratio of the loan. For those borrowers whose homes have been destroyed and their assets have suffered serious losses, the CBRC has particularly emphasized that banks should write off their loans in full as much as possible to reduce their burden.
In addition, in order to speed up the economic recovery of the disaster-stricken areas, the CBRC also requires banks to provide special loan support to hard-hit enterprises, which will have lower interest rates and longer repayment periods. For many people who lost their homes in the earthquake, this policy is a relief in disguise.
References:[1]Li Dongwei. Hainan Finance,2008(7):86-88