The Chinese government is set to grant more banking licenses to those who want to operate banks in the country, after initially awarding five private banks with licenses last year.

Twelve private banks are reportedly processing the necessary documents to get their licenses to operate, with most of them committed to provide financial assistance to technology startups and existing companies.

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According to the China Banking Regulatory Commission (CBRC), the banks have promised that should they receive their licenses to operate in the country, they will focus on helping technology companies in China.

China has been pushing for the entry of private capital into the banking sector through various channels, like allowing private companies to start the establishment of privately-owned banks.

The CBRC has written detailed rules specifying the principles, policies, standards and procedures for the approval of the establishment of private banks.

The market niche for these private banks includes internet finance and supply chain finance, depending on the backgrounds of their major shareholders and local government support. They will mainly target micro and small companies.

The city of Shanghai has a private bank, its first, but is ready for another in the city's Zhangjiang Hi-tech Industrial Development Zone. Regulators have finished a feasibility study to set up a private bank in Fujian, a province on the southeast coast of China. Other cities are also interested in establishing private banks.

One bank, Fujian Huatong Bank, which has a registered capital of Rmb3 billion (US$450 million), was promoted by 10 Fujian-based companies in different sectors, including retail, manufacturing and real estate.

Under the mechanism, a commercial bank will forge strategic cooperation agreements with investment institutions that invest in qualified technology companies. The bank will then extend loans to such tech companies. 

TagsChina Banks, China Private Banks, China Bank Licenses, China Bank Permits