Official: China to move forward with tougher bank rules (2)

"It will be a Chinese version of capital criteria, tailored to suit Chinese banks' balance sheets, risk and business models."

The banking regulator also expects the new rules to help banks improve their capital quality. The stricter criteria will call for larger banks to have a capital adequacy ratio of 11.5 percent and non-systemically important ones to have a ratio of 10.5 percent.

Wang said regulators will soon release guidelines to encourage banks to develop capital instruments that will help them replenish their capital. Those are likely to come out before the end of the year.

"Banks will not maintain the pace of expansion they have seen in the past 20 or 30 years, when they piled up profits very easily and rapidly."

The State Council announced in June that the new rules will take effect at the beginning of 2013.

The new requirements will follow the Basel II and Basel III recommendations on banking laws, both of which were issued by the Basel Committee on Banking Supervision, a global group of central bank governors.

The US has decided to delay its adoption of the Basel III rules, while leaders in Europe have intensified their debate over whether the rules should go into effect next year.

Beijing, for its part, had once planned to put the new rules into effect at the beginning of this year. The country later decided, though, to postpone the change to July, instead responding to a further weakening in the economy by adopting looser monetary policies and banking regulations.

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