Raising interest rates against the trend: Village and township banks activate deposit special forces

In the context of continuously falling deposit interest rates and narrowing spreads among different banks, the once-popular “Deposit Special Forces” have diminished in influence. However, Beijing Business Daily reporters have noticed that some depositors have not given up their pursuit of high yields and are turning their attention to regional small and medium-sized banks. In Guizhou Province, some village and township banks have launched fixed-term deposit products during their “Red Opening” campaign, with three-year rates reaching 2.3% and five-year rates at 2.35%, with a minimum deposit of only 50 yuan. Based on a 100,000 yuan deposit over five years, the maturity interest could reach 11,750 yuan, earning over 1 percentage point more than five-year deposits at state-owned banks, attracting many depositors’ attention. Analysts suggest that cross-province deposits should weigh transportation costs against overall returns, while also considering the convenience and safety of remote services, early withdrawals, and dispute resolution. Depositors should adhere to deposit insurance protections, diversify their funds reasonably, and balance liquidity, avoiding blindly chasing short-term high yields and ignoring potential risks.

Five-year rate 2.35%

Currently, the banking industry’s deposit rates have fully entered the “Era 1,” with major state-owned banks offering a standard five-year fixed deposit rate of 1.3%. The “Deposit Special Forces” who once chased high yields across provinces and cities two years ago have largely faded from public view due to the narrowing interest rate spreads that no longer cover transportation costs.

However, market changes are quietly awakening this group. On February 25, Beijing Business Daily reporters observed that some depositors are turning their attention to local village and township banks with relatively higher interest rates. Some have posted photos of fixed deposits they opened in Guizhou Province, proudly noting “Cross-province deposit success”; others have said they are on their way to Guiyang to learn about fixed deposit products offering 2.35% interest. The long-dormant “Deposit Special Forces” are once again embarking on cross-province deposit journeys.

From the information shared by depositors, the main reason for their cross-province travel is the deposit products marketed by several local village and township banks in Guizhou. For example, Gui’an New District Development Village Bank and Guiyang Xiahe Technology Village Bank currently offer relatively high deposit rates, with some customer managers actively posting product information and recruiting depositors via social media.

To verify these details, Beijing Business Daily reporters inquired as depositors. A customer manager from Gui’an New District Development Village Bank sent details of their 2026 “Red Opening” deposit promotion. The bank’s fixed deposit rates start at a minimum of 50 yuan, with rates of 1.75% for one year, 1.95% for two years, 2.3% for three years, and 2.35% for five years. For a 100,000 yuan deposit, the interest at maturity would be 1,750 yuan, 3,900 yuan, 6,900 yuan, and 11,750 yuan respectively. Besides interest, the promotion includes points exchange benefits: 10,000 yuan in fixed deposits can be exchanged for 1 point, with 5 points redeemable for a bag of rice, and 10 points for a bottle of rapeseed oil.

Currently, the five-year fixed deposit rate at major state-owned banks remains at 1.3%, meaning a 100,000 yuan deposit would earn 6,500 yuan in interest over five years.

Guiyang Xiahe Technology Village Bank also launched a similar promotion. A customer manager explained that their fixed deposit minimum is also 50 yuan, with three-year and five-year rates at 2.3% and 2.35%, respectively. Regarding procedures, both managers stated that first-time depositors must visit the bank counter to open a fixed deposit, after which they can manage deposits and withdrawals online.

Compared to the current industry-wide deposit rates, these two village banks’ long-term deposit products have a clear interest rate advantage, which is a key reason attracting out-of-town depositors to cross provinces. Beijing Business Daily reporters further contacted these banks for more details. A customer service representative from Gui’an New District Development Village Bank confirmed the rates and activities and added that out-of-town depositors must bring a valid ID with over six months’ validity to open a first-class or second-class account at the counter. The second-class account is an electronic account, which must be activated before online deposit management. The customer service lines at Guiyang Xiahe Technology Village Bank were unresponsive.

Experts believe that in the current industry-wide downward interest rate cycle, village and township banks raising long-term deposit rates is not simply “favoring depositors” but a passive response driven by liability pressure. Wu Zewei, a special researcher at Su Commercial Bank, pointed out that under the backdrop of generally low deposit rates at major state-owned banks, some village banks offering higher rates are quite attractive to depositors. However, from a sustainability perspective, such high-interest deposit campaigns are typically short-term “Red Opening” tactical moves. With net interest margins at historic lows, banks generally cannot sustain high-interest liabilities long-term. These products are part of banks’ strategies to avoid locking in large amounts of high-cost liabilities. It is expected that after the first quarter, such high-interest products will gradually phase out.

Avoid blindly chasing high yields

The “Red Opening” period each year is a key battleground for banks to attract deposits, with many launching various deposit products and marketing campaigns to compete for market share. However, as the reform of interest rate marketization deepens and banks’ net interest margins remain under pressure, their deposit strategies are increasingly differentiated—large banks adopting a more “laid-back” approach, while small and medium-sized banks become more aggressive.

Some local banks tend to boost deposit rates, launch special deposit products, and offer rich benefits to capture market share. The reasons include, on one hand, their relatively weak customer base and lower brand recognition, forcing them to use interest advantages to attract funds; on the other hand, they have strong demand for credit, especially for local small and micro enterprises and farmers, requiring ample liabilities to support lending. During the “Red Opening” period, depositors’ willingness to save is high, making it an ideal time to supplement funds.

However, it’s important to note that in the short term, deposit rate hikes are often limited to specific products, terms, and minimum amounts, mainly as targeted measures to seize early-year funding windows and boost “Red Opening” campaigns. These are not indicative of a sector-wide, long-term shift in interest rates.

Caution is also needed regarding illegal practices. During investigations, Beijing Business Daily found that some bank managers privately disclosed that, beyond official deposit interest and points exchange, they could also offer benefits like travel subsidies for large depositors.

Regulators have long issued bans on banks offering cashbacks, gifts, manual interest boosts, or coupons as disguised high-yield deposit promotions, and strictly prohibit unfair competition that disrupts the deposit market. Since 2025, many local regulators have launched special rectification campaigns to eliminate such covert interest-increasing activities, standardize marketing practices, enforce interest rate disclosure, and promote compliance.

Senior financial regulation expert Zhou Yiqin pointed out that depositors traveling across provinces or cities specifically to open fixed deposits at village banks should consider several points. Cross-province transactions incur transportation costs, and if the interest rate difference is small, the overall benefit may not justify the effort, which also consumes personal time and energy. Village banks typically only have local branches and cannot handle offline transactions elsewhere. If depositors encounter issues like lost deposit slips, information changes, early withdrawals, or disputes, they can only seek online support or visit local branches, making subsequent service and rights protection more difficult. These high-interest products are often short-term deposit campaigns with limited quotas and are not sustainable long-term investments. In the current low-interest environment, ordinary depositors are advised to prioritize large, stable, and well-managed commercial banks with strong risk control, balancing safety, liquidity, and stable returns. Pursuing short-term high yields at the expense of unnecessary risks is not recommended.

For depositors, Wu Zewei reminds that in the current environment, key advice for long-term fixed deposits is to adhere to deposit insurance protections, diversify large sums, choose terms based on personal cash flow plans, and avoid sacrificing liquidity for higher yields. Be cautious of promises of rebates or gifts from customer managers, and view “Red Opening” products as short-term tactical offerings.

Beijing Business Daily Financial Investigation Team

(Edited by: Qian Xiaorui)

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