The China Banking Regulatory Commission (CBRC) issued a directive on boosting the development of private banks in recent days. In order to improve the efficiency of the application process, China's bank watchdog would inform applicants of the results within four months, though the legal time limit for such processes is six months.

For the time being, more than 40 domestic private enterprises have applied for starting private banks, said CBRC chairman Shang Fulin at a State Council news briefing.

Most of the shareholders of the private banks are big private enterprises with market experience which might have a better knowledge of upstream and downstream firms, small businesses, farmers, rural areas and agriculture. Then, private banks possibly tap effective demand for credit against financing bottlenecks in the real economy.

Webank, Mybank and other Internet banks are newcomers to the Chinese banking industry, which challenge the traditional regulations of the bank watchdog. The larger significance of the existence of private banks lies in the possibility that they might pose a catfish effect on the governance environment of all the Chinese banks and help enhance the whole regulatory system.