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BEIJING -- Yu'ebao, China's most popular Internet fund product, is in hot water as three State-owned banks have reportedly halted inter-bank deposit business with Tianhong, the fund manager.

A report on the Economic Observer's website on Thursday said that the headquarters of the three banks have stopped accepting interbank deposit transactions between their branches and Tianhong, citing an anonymous source from one of the three banks.

"Overly high costs were given as the main reason for refusal to do business with Tianhong," the report said, without identifying the banks.In the last couple of weeks, some have been calling for the closure of Yu'ebao for its "adverse impact on the real economy", while a great number of citizens support it because of its higher yields than bank deposits.

The debate seemed to be ending when Zhou Xiaochuan, governor of the central bank, said at the ongoing "Two Sessions" that Yu'ebao will not be banned, but regulating will be improved.

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