The vanished official seal and the "faulty" loan: GF Bank Xidan Branch's suspected illegal lending sparks a 13-year dispute

In Spring 2026, coinciding with International Consumer Rights Day on March 15th, “Consumer Daily” published an in-depth investigative report exposing a 13-year-long joint guarantee loan dispute at GF Bank’s Xidan Branch.

Businessman Bai Yandong bears joint guarantee liability of over 1.8 million yuan. After more than a decade of persistent rights protection, a key development occurred with regulatory authorities stepping in to investigate. This long-standing old credit case also clearly reflects how, over more than ten years, domestic bank joint guarantee loan products have gradually shifted from an innovative solution to address micro and small enterprise financing difficulties into a risky industry prone to risk control failures.

Compliance Failures in the Initial Approval of Joint Guarantee Loans

The root of this prolonged dispute dates back to 2013. At that time, China’s credit market was rapidly expanding. The joint guarantee loan model, based on the core logic of “multiple parties jointly guaranteeing and mutually supporting,” was widely promoted as an important financial innovation to alleviate financing difficulties and high costs for small and micro enterprises and individual merchants. Its original intent was to enhance creditworthiness through mutual assistance among merchants, compensating for the lack of collateral and incomplete credit ratings of micro and small entities.

However, in practice at GF Bank’s Xidan Branch, this well-intentioned financial product showed obvious compliance deviations during implementation, with rigid institutional requirements reduced to mere formalities.

According to complete credit files obtained during rights protection, Bai Yandong and two other borrowers, Zhao Zhiyuan and Wang, formed a joint guarantee group to apply for a total joint guarantee loan of 7.5 million yuan, with Bai Yandong’s credit limit at 3 million yuan and Zhao Zhiyuan’s at 2.5 million yuan. Under GF Bank’s then “Small Enterprise Joint Guarantee Loan Management Measures,” applicants needed to be members of the China Business Enterprise Management Association and hold an official recommendation letter stamped by the association to qualify for a joint guarantee loan.

In reality, this was far from the case: Bai Yandong and his operating entities never paid membership fees or completed any membership procedures, thus failing to meet basic eligibility requirements.

More critically, the recommendation letter, which served as a key qualification document, had obvious formal defects. The copy retained by the bank lacked the official seal of the borrowing enterprise and the valid signature of the China Business Enterprise Management Association, making it an invalid blank document.

Subsequently, the association also issued a written certification explicitly stating that it had never issued any loan recommendation documents to Bai Yandong or his entities. This core fact meant that the fundamental eligibility threshold for the 7.5 million yuan loan had been completely bypassed at the pre-approval stage, with the compliance review’s first line of defense entirely breached.

In addition to false qualification claims, the creditworthiness of the core members of the joint guarantee group was also seriously overlooked, even breaching typical bank risk control standards. During rights protection, personal credit reports showed that just before the loan was issued in 2013, Zhao Zhiyuan already had serious negative records, with multiple overdue credit card payments. According to standard bank risk control logic, such a borrower would be automatically classified as ineligible for new credit in the system’s screening process. However, GF Bank’s Xidan Branch did not reject the application through normal procedures but instead approved it via an “exception approval” process, breaking usual risk control principles. This special operation, which defied standard risk management, laid hidden dangers for subsequent guarantee disputes and risk transmission, directly involving Bai Yandong in a long-standing joint guarantee vortex lasting over ten years.

From a professional risk control perspective, this was not merely an operational mistake but a substantive failure in the pre-loan review process. More concerning was that behind this business was intermediary agencies such as Beijing Lianrong Xinda Investment Management Co., Ltd., which forcibly bundled three unrelated natural persons—engaged in railway testing, building materials wholesale, and jade retail—into the joint guarantee group, completely deviating from the core design of “same industry, upstream and downstream, business related” for joint guarantee loans. The essence of such groups is a loose collection lacking a risk-sharing foundation.

The bank not only failed to investigate or reject such unreasonable joint guarantee combinations but also, after Zhao Zhiyuan defaulted, deducted the entire 750,000 yuan (10% of each borrower’s contribution) deposit paid by the three parties to offset the debt. This credit asset, fraught with multiple risks from the outset, was doomed to default and dispute from the moment of contract signing.

Regional Recurrence of Irregularities

Bai Yandong’s experience is not isolated. Extending the view from Xidan Branch to GF Bank’s nationwide branches reveals that similar violations in joint guarantee loan operations have been repeatedly replicated across multiple locations, reflecting a business orientation bias among some grassroots branches prioritizing “scale first, compliance later,” with risk control lines long inoperative.

In 2022, a dispute involving GF Bank’s Zhengzhou Branch surfaced, showing highly similar violations to the Xidan case. Multiple merchants reported to regulators that intermediaries lured them into three-party joint guarantee loans with promises of “low-interest inclusive loans.” Subsequent investigations found that although the business data and financial statements submitted by several borrowers appeared complete and independent, they exhibited abnormal uniformity—core financial indicators like revenue growth, gross profit margin, and tax payments showed standardized patterns inconsistent with normal operations, clearly fabricated and packaged by intermediaries with the bank manager’s tacit approval.

This superficial pre-loan review caused the core risk control line to fail completely. Once a single borrower defaulted, the joint guarantee liability would quickly propagate, forcing otherwise stable merchants to not only repay their own principal and interest but also bear hundreds of thousands of yuan in joint guarantee debts, plunging them into dual operational and debt crises.

Returning to Bai Yandong’s case, this “scale-first” risk control deviation ultimately resulted in severe consequences for the compliant guarantor. After Zhao Zhiyuan defaulted and disappeared, GF Bank immediately initiated recovery procedures against Bai Yandong based on the guarantee contract. Although Bai Yandong’s own 3 million yuan loan was repaid on time, the bank, citing the joint guarantee clause, began asset preservation measures against his assets. His business operations and asset disposal were significantly impacted, and the debt continued to grow under the accrual of interest and compound interest.

During rights protection, Bai Yandong repeatedly submitted evidence to judicial authorities, demonstrating that the bank, despite knowing Zhao Zhiyuan’s serious credit issues, approved the loan through an illegal exception process, raising doubts about risk transfer legitimacy. However, courts historically based judgments on the formal completeness of written guarantee contracts. The internal “exception approval” document, which proved the bank’s violation of pre-loan review procedures, was kept in the bank’s archives and not disclosed publicly, becoming a key obstacle in Bai Yandong’s early legal defense. Ultimately, he was forced to bear a joint liability of over 1.8 million yuan.

This situation—emphasizing contractual formality over substantive compliance—transfers the risk and loss from bank violations onto the information asymmetry and non-compliance of the borrower, causing not only individual economic losses and business stagnation but also undermining fairness principles in financial transactions.

From Mutual Support to Mutual Destruction in Joint Guarantee Loans

Bai Yandong’s decade-long personal rights protection journey reflects a broader industry reflection and correction regarding the joint guarantee loan model.

Reviewing public opinion and judicial cases from 2013 to 2025 involving listed banks shows that defaults and crises in joint guarantee loans are not isolated incidents but have evolved into systemic risks facing the entire industry. Originally designed to facilitate mutual financing among micro and small entities, these financial tools have gradually become mechanisms for mutual entrapment and cross-contagion of risks.

A notable case involved Minsheng Bank’s Dalian Branch, which exposed severe issues of internal collusion between staff and external intermediaries, with complete risk control failure across the entire process.

Judicial rulings revealed that four core credit staff at the Yuexiu Branch colluded with external agencies for a long time, fabricating key materials such as marine fishery operation records, and illegally issued joint guarantee loans totaling 360 million yuan. This was not a simple operational mistake but a failure of compliance throughout the entire loan process—pre-loan investigation, approval during the loan, and post-loan management.

In 2022, the court’s final judgment held responsible individuals criminally liable for illegal lending, breaking the industry perception that bank violations only attract administrative penalties. The ruling clarified that gross negligence and illegal lending constitute criminal offenses, with huge state assets lost and dozens of guarantee families’ credit destroyed, sounding a warning bell for risk control across the industry.

Similarly, a case at China Construction Bank’s Ningbo Branch revealed risk control blind spots caused by information silos under the syndicated joint guarantee model. In 2013, a syndicated loan involving over ten micro and small enterprises with a total credit line exceeding 30 million yuan was issued jointly by CCB, China Merchants Bank, and Shanghai Pudong Development Bank. However, these banks failed to establish effective credit information sharing mechanisms. The core borrower used multiple credit lines and repeated pledges, with actual debt leverage far exceeding asset values. When the main enterprise’s controller disappeared, risks rapidly propagated in a domino effect, freezing assets worth over 120 million yuan across more than ten unrelated small and micro enterprises. The original goal of credit enhancement through joint guarantee was undermined by cross-bank information gaps, turning the model into a highly contagious financial risk vector, destroying the initial mutual benefit intent.

From both legal and practical perspectives, the widespread failures and disputes in joint guarantee loans are fundamentally due to some banks outsourcing core risk control responsibilities, leading to a complete breakdown of credit risk management.

The core logic of joint guarantee loans relies on moral constraints and asset bundling among borrowers to hedge the risk control costs of micro loans. However, in grassroots operations, this logic has been severely distorted. Cases such as the fraud at Huarong Xiangjiang Bank’s Shaoyang Branch, where loan officers knowingly approved fake materials resulting in 100 million yuan being defrauded, and GF Bank’s Xidan Branch’s exception approval for severely flawed credit applicants, all show that many banks have weakened core credit review processes. They rely heavily on joint guarantee clauses to shift risk onto guarantors, violating fundamental risk control principles.

In response to the accumulated risks of interconnected guarantees, regulators issued a notice in 2022 requiring a “penetrating review” of large guarantee and multi-member joint guarantee groups to identify hidden risks.

In March 2025, the State Financial Supervision and Administration Bureau officially accepted Bai Yandong’s ongoing complaints, bringing this 13-year joint guarantee dispute into the highest regulatory review. The blank recommendation letter without a seal and the illegal “exception approval” documents submitted by Bai Yandong became key evidence of bank compliance. Although GF Bank claimed operational compliance, their explanations lacked substantive credibility when confronted with regulatory system data, and targeted investigations are ongoing.

As nationwide risk inspections of interconnected guarantees deepen, regulators’ core focus is clear: not only to resolve risks but also to clarify responsibilities, especially to identify cases where banks’ illegal lending or negligent approval unjustly impose guarantees on innocent guarantors. Within the legal framework, balancing contractual formalities and substantive fairness is essential to protect legitimate rights and interests.

Legal experts point out that if subsequent investigations confirm that banks concealed key risks, violated regulations, or maliciously transferred risks during guarantee contract signing, then under the Civil Code and financial supervision regulations, the guarantor’s liability may be legally reduced or even exempted.

Finance’s core is trust, and trust’s bottom line is compliance. This 13-year-old joint guarantee case, even after many years, continues to highlight industry pain points: if grassroots banks prioritize scale over risk control, treat credit approval as a performance breakthrough, and reduce core risk responsibilities to mere formalities, then not only individual entrepreneurs’ rights are harmed, but the entire financial market’s contractual credibility is undermined.