Even the 13 shareholding commercial banks are neither genuine shareholding nor real commercial banks. Except for the only one private bank, the absolute majority of shareholders of these banks are other state-owned institutions. They are free of policy loans, but are not completely immune from government's industrial policy. As to the large number of city commercial banks, they are very small, and even less commercial given the inevitable interference from local governments. Domestic banks, especially the state banks, remain inefficient.
Many problems inherited from the past have yet to be sorted out.
The shareholding commercial banks are in general better than the state banks. But on the whole, they are still relatively weak when compared with international standard. One main problem for the banking sector is the high ratio of bad and doubtful assets. If banks have to make provisions for these NPLs in accordance with international standards, many domestic banks are probably actually making losses, instead of their reported profits. The opening up of the banking market to foreign banks started in the mid-1980s, initially in the Special Economic Zones and subsequently expanded to other cities.