BEIJING - China's top banking regulator Monday requested financial institutions put in place the differentiated credit policy to boost cash-strapped small businesses.

The China Banking Regulatory Commission (CBRC) will set up more small-scale financial institutions to serve more micro-sized companies, said CBRC Chairman Shang Fulin at a meeting.

He reiterated efforts must be made to ensure that the growth rate of the credit for the small business should not drop lower than that of the bank's average level. Also Shang said the incremental volume of the credit should be no less than the same period a year ago.

CBRC unveiled the two targets in 2008 to encourage banks to increase support to the fund-thirsty small enterprises, despite the central bank's order to tighten lending to other types of business to fight against inflation in the following years.

The outstanding loans to small companies totaled 10.8 trillion yuan ($1.71 trillion) by the end of 2011, or one-fifth of the total, as CBRC's targets were met in the following three years.

Also by the end of 2011, the non-performing loan stood at 2.11 trillion yuan, 435 million yuan less than that of the beginning of 2011. The non-performing ratio was 2.02 percent, 0.95 percentage points lower than the year beginning.