It is necessary to increase the number of medium- and small-size banks and insurance companies and expand their business, so as to provide more effective financial services to the real economy and deepen financial supply-side reforms, said Xiao Yuanqi, Chief Risk Officer at the China Banking and Insurance Regulatory Commission, The Paper reported.

Currently, most of the more than 4,800 banks and insurance agencies are small and medium-sized entities, Xiao said. In the next step, more specialized and professional institutions will be added, and more foreign financial institutions will also be introduced.

The CBIRC will also try to avoid risks in those newly added institutions, said Xiao.

For high-risk institutions, various measures will be taken to reduce risks, including mergers and acquisitions and bankruptcy. Institutions in good condition can also merge and restructure with those in worse situations, Xiao suggested.