China will set up three to five fully private banks on a trial basis this year in a bid to further open up the banking sector to domestic and foreign capital, according a statement made on January 6 by the China Banking Regulatory Commission (CBRC).

Private capital will be introduced to restructure current banking institutions or set up new ones which bear their own risks, the CBRC said at a work meeting.

Strict procedures and standards will be set for the pilot banks, with demanding set-up criteria, limited licenses, enhanced supervision and a risk handling system.

The CBRC will try to relax the threshold for foreign capital to enter China's banking sector and ease operation requirements for the yuan, while more policies will be issued to support banking reform in the Shanghai free trade zone and the financial reform pilot zone.