China's smaller rural banking institutions are encouraged by the industry regulator to get listed on stock markets when conditions are ready, a source with the China Banking Regulatory Commission (CBRC) said on Wednesday.

CBRC supports the eligible smaller rural banking institutions in introducing strategic investors from abroad, the source added.

The industry watchdog ordered the rural banking institutions to ensure a capital adequacy ratio at 8 percent and their average non-performing loan ratio at less than 10 percent by 2010.

At the end of 2010, a modern financial corporate system should be established initially for the smaller rural banking institutions, with their corporate governance improved significantly and competitive edge sharpened substantially, according to CBRC.

CBRC data show that by the end of 2007, combined assets of the smaller rural banking institutions nationwide amounted to 5.6 trillion yuan (US$787.6 billion), up from the 2.2 trillion yuan in 2003. They made 1.2 trillion yuan in loans to more than 300 million farmers from 78.17 million households, up from 400 billion yuan in 2003.