CHINA'S top banking regulator said today it will continue to provide policy support to city commercial banks as they may have reached a plateau in development.

"City commercial banks shall break through (the restraints of development) as they enter a critical period," Shang Fulin, chairman of the China Banking Regulatory Commission, said at an annual meeting with the lenders.

"City banks have a responsibility to serve small and micro businesses," Shang said, adding the commission will continue to support the lenders in this regard.

Total assets of Chinese city banks had reached 13 trillion yuan (US$2.1 trillion) by the end of April, accounting for 9.4 percent of the entire banking industry. The big lenders hold 42.9 percent of the market while joint-stock banks accounted for 18.5 percent, according to the CBRC.

City commercial banks had higher growth rates compared to their larger counterparts in the past few years. However, expansion fell behind joint-stock banks this year as more capital is needed to meet the growing credit demand of cash-starved small companies.

Analysts said city banks have seen growth slip due to hindered IPO plans and expansion into others cities .

The city commercial banks collectively expanded at a rate of 26 percent in the first four months this year, compared to 30 percent for joint-stock banks.

City banks expanded at 35 percent in 2009.