China's banking regulator has introduced tighter rules for pawnshops to provide better financial services for individuals, micro, small and medium-sized enterprises.

The interest rate charged by pawnshops should correspond to the country's benchmark loan prime rate and service charges should be reasonable, according to the China Banking and Insurance Regulatory Commission.

Local governments have been encouraged to support pawnshops via risk compensation funds, bonuses and subsidized loans, said a circular issued by the regulator.

The circular also requires strengthened information sharing among market regulatory departments to ensure the sector's quality development.

By the end of 2019, China had 8,397 pawnshops, with total assets of 160.27 billion yuan ($22.47 billion).