POLICY support will continue to be given to domestic city commercial banks to boost their small loan business, Shang Fulin, chairman of the China Banking Regulatory Commission, said yesterday.

"The city commercial banks shall break through (the restraints of development) by transformation, as they enter a critical period," Shang said at an annual meeting with the city banks.

They have a "bounden duty" to service the small and micro businesses, and Shang reiterated the CBRC will continue to support the city banks in the micro finance business.

The outstanding loans to small businesses totaled 2 trillion yuan (US$324 billion) by the end of the first quarter, while the total outstanding balances reached 5.5 trillion yuan at the city banks.

The city banks's assets grew 26 percent in the first four months of this year, a weaker growth than the 30 percent achieved by the joint-stock banks in the same period. The growth was also a slowdown from the 35 percent the city banks posted in 2009.

Stalled initial public offerings and expansion to other cities were blamed for their slowing growth, analysts said.

The city banks held 13 trillion yuan in total assets by the end of April, accounting for just 9.4 percent of the banking industry, the CBRC said.