The China Banking Regulatory Commission (CBRC) revised its rules to step up supervision of small and medium-sized rural banks.

The draft document was published on October 9 on the website of the Legislative Affairs Office of the State Council to solicit opinions, which should be submitted before November 9.

The draft specifies conditions for establishing rural banks, stating that shareholders who are natural persons should not buy shares amounting to more than 2 percent of the rural bank's capital stock.

Shareholders who are employees of the bank should not buy shares amounting to more than 20 percent of the bank's capital stock.

Shareholders who are domestic non-financial institutions cannot buy shares exceeding 10 percent of the bank's stock, excluding mergers or restructuring of high-risk rural credit cooperatives.

Overseas banks intending to invest in the Chinese mainland's rural banks should first submit applications to the CBRC, which will adjust criteria for overseas investors based on the financial sector's risk profile.