China is set to finalise the initial regulations of online-only banking in the country in a bid to lure foreign players.

The move is reported by Reuters citing three sources familiar with the development. However, Chinese authorities including People’s Bank of China did not confirm the step.

The new framework seeks to mitigate financial risks with the sector as well as enable existing foreign lenders to set up separate digital entities.

The banks will be allowed to hold majority stakes in the online-only banking units. They can also collaborate with fintech firms to launch the digital ventures.

One of the sources told the news agency that several firms have expressed interest to roll-out digital banking units.

Existing online banking units of Alibaba Group Holding, Tencent Holdings and others will also come under the purview of this new framework.

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The news comes a week after the China Banking and Insurance Regulatory Commission (CBIRC) released new banking regulations.

The regulations amended existing framework in order to facilitate the entry of foreign lenders into the local market. The changes included nullifying the required total assets for foreign banks to set up businesses in China.

Currently, China has four licenced online-only banks. At the end of 2018, these four entities had around $56bn in total assets. The figure represents only 0.15% of China’s total banking assets.