China set to encourage opening of private banks

China will encourage the establishment of private financial institutions on a trial basis, in the latest move to deepen financial reform and open up the financial sector as well as pushing forward the transformation of the banking sector, the Beijing News reported Thursday citing a statement by the banking regulator.

The private financial institutions will operate at their own risk so as to avoid infringing on the interests of depositors, creditors and taxpayers, the China Banking Regulatory Commission (CBRC) said at a work conference Wednesday.

Meanwhile, the CBRC will also work out detailed standards and conditions for private capital to invest in rural banks.

The CBRC has listed the establishment of private financial institutions as a priority for the second half of the year.

The banking watchdog's statement is a follow-up to guidance issued on July 5 by the State Council on financial reform, which mentioned the pilot program of private banks for the first time.