As a major part of financial reforms in Wenzhou, a private-financing and management regulation is expected to be legislated in September or October after being approved by the Zhejiang provincial government.

The draft plan for the regulation in Wenzhou had been handed down by the city's finance office in November 2012 to the Zhejiang provincial government for final review.

Under the new regulation, the annual loan interest rate will be capped at 48 percent, with banks and other financial agencies that breach the new rule facing an administrative penalty.

"The bank interest rate turns to be more flexible with regulated 48 percent limit to meet the changes of market after the launch of the regulation," said an insider who was one member of the team working on the regulation at the moment, according to the Securities Daily.

He added that the regulation will promote regulated development of private financing environment and boost the real economy by setting up monitoring system to get records of loan lending registration.

Wenzhou had been selected for the pilot project of financial reform since March 2012, after the outbreak of a financial crisis that arose from widespread loan defaults by many hard-pressed factory owners and investors.

"The regulation will also allow the enterprises to get access to the inter-company loan market by having authorized short-term loan lending activities between each other," the source said.