Police on the mainland have arrested more than 200 suspects linked to what authorities have called a "complex" banking scam.

Four banks in central Henan province suspended cash withdrawals in April as regulators cracked down on mismanagement, freezing the funds of hundreds of thousands of customers.

Police said on Monday they had now arrested 234 people in connection with the scandal and that "significant progress" was being made in recovering stolen funds.

"A criminal gang... illegally controlled four village and town banks... and was suspected of committing a series of serious crimes," police in the city of Xuchang said in a statement on Monday.

Henan’s financial authorities have also said they will begin from Tuesday making another round of repayments to clients of four rural banks whose funds were frozen.

Individuals with deposits of 400,000 yuan to 500,000 yuan will be repaid, the Henan branch of the China Banking and Insurance Regulatory Commission and the provincial financial bureau said in a joint statement. (Agencies)