Liu Shiyu, a senior official in charge of banking supervision, said small and medium-sized commercial banks had accounted for 20 percent of the total assets, deposits and loans of the country's commercial banks by the end of June this year.

Their development has promoted competition between banks and benefited the growth of small and medium-sized enterprises and private enterprises.

Liu said the People's Bank of China will give go-ahead to applications for establishing small or medium-sized commercial banks in cities and prefectures without commercial banks, as long as the investment by local enterprises and individual capital reach 100 million yuan (US$12 million) and requirements of the law on commercial banking are met.

But he gave no details on how overseas investment can enter small and medium-sized commercial banks.

The official said government departments have been exploring ways to guide private investment in commercial banks during the country's financial reform.

Small and medium-sized commercial banks in China were set up during the process of the country's transition from a planned economy to a market economy.

(Xinhua News Agency September 17, 2002)