Imperfect internal control mechanisms in financial institutions, high bad debt and shadow banking have impact on the financial system, Guo Shuqing, chairman of the China Banking Regulatory Commission, told the newspaper People's Daily in an interview, published on Wednesday.
The resulting hidden dangers threaten China's financial stability, Guo said.
Risks in China's financial system are generally manageable, the top official said, while adding that the situation is still complicated and serious.
The regulator needs to focus on reducing corporate debt, contain household leverage, regulate cross-financial sector products and dismantle shadow banking, Guo said.
China should lower corporate debt ratio and contain households' leverages, he stressed.
Guo, who took office early last year, launched different measures to contain malpractices and strengthen banking industry.
The official said action will be taken against those who build large financial institutions through complex structures, fictitious investment and capital injection.
He observed that some of the shareholders of banks have treated their banks as own ATM machines and engaged in unfair transactions.
Further, Guo cautioned that any major financial turmoil will affect economic and social life.
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