BEIJING - China's rapidly growing margin lending is posing indirect risks to banks by raising their exposure to market volatility, global rating agency Fitch said.

However, the amount of margin lending, or banks' lending to trust and securities firms, is still within control by the banking sector as a whole, noted a Fitch report, and is far from causing significant challenges to the banks.

The aggregate amount of margin lending balance at China's stock market has almost doubled since the end of 2014 to reach 1.9 trillion yuan ($311 billion), 3.1 percent of total market capitalization as of May.

The epic amount of margin lending has contributed to a surge in China's A-share stock market, which has seen more than 30 percent growth since the beginning of the year, it added.

Chinese banks do not lend directly to investors to finance stock purchases, but they do lend to securities firms, and they also finance leveraged products issued by trust, fund management and securities firms, which expose the banks to risks from the volatility of stock market.

Banks' asset quality will be more closely affected by the trust and securities firms, and their credit profiles will also be influenced by the performance of the stock market. Furthermore, banks' profitability will be reduced if the margin lending was scaled down from weaker investor needs or regulatory tightening.

Earlier in January, China Securities Regulatory Commission, the market regulator, announced that 12 brokerage firms had been punished for violations of margin trading rules after a two-week inspection.

Analysts said that strengthened checks on margin trading, which is believed to have fueled the recent rally, indicated policy makers' intention to cool an excessive rise in the country's stock market.

The announcements also indicate that regulations are not strictly followed by market players, Fitch cautioned.

Meanwhile, China Banking Regulatory Commission, the top banking supervisor, said it was considering rules to ban banks from lending to companies that borrow to invest in equities, bonds, futures and derivatives.

The central bank and banking regulator may place further restrictions on margin lending to prevent the potential risks to the banking system, Fitch said.