Big four State financial players battle upstart for nation's massive base of deposits

That all four major State-owned banks in China had cut their daily transfer limits to Yu'ebao, a fund management platform of Chinese e-commerce giant Alibaba Group Holding Ltd, to 5,000 yuan ($820) from the previous 50,000 yuan by last weekend, raises a vexing question: What law gives banks the power to restrict customers' rights to manage their own wealth?

Yu'ebao offers around a 6 percent annualized return, much higher than the banks' 0.36 percent interest rate on demand deposits. Since its launch nine months ago, Yu'ebao has pooled about 500 billion yuan in a cash balance from 81 million users of Alibaba's Alipay, a third-party payment system like Paypal.