China's deposit rates will be liberalised in one to two years, central bank Governor Zhou Xiaochuan said on Tuesday, a step up in pace from what analysts had initially predicted.
Speaking at a press conference on the sidelines of the National People's Congress, Mr Zhou said interest rates will rise as controls are removed amid Beijing's attempt to give markets a bigger role in the economy even as it tackles rising risks from shadow banking and a credit boom.
Mr Zhou's comments come after an earlier government report that said China is expected to establish a deposit insurance system this year, often seen as the last and most important step of interest rate liberalisation.
China will also launch pilot tests of privately owned banks in its wealthier cities of Tianjin, Shanghai, Zhejiang and Guangdong, the country's bank regulator Shang Fulin said on Tuesday.
Approved by China's government in January, the pilot is the first tentative step by the country to open its mostly state-controlled banking sector to private investors.
Private investment accounted for about 11 per cent to 12 per cent of China's banking industry's total capital, with the rest controlled by the state, Xinhua News Agency reported earlier this month, citing former president of Industrial & Commercial Bank of China Yang Kaisheng.