The State Council has announced new rules that set tougher capital criteria for lenders at the beginning of 2013.

Based on the Basel II and Basel III agreements set by the Basel Committee on Banking Supervision, the tougher standards require what are deemed to be systemically important banks to have a capital adequacy ratio of 11.5 percent.

For banks that are not systemically important, the ratio is 10.5 percent. Banks are expected to meet the requirements by the end of 2018.

Despite the obstacles, many believe freeing rates is "essential" work for China and determines how China's financial industry will be shaped in the future.

"Over the longer term, we believe the liberalization of interest rates will provide the basis for a more efficient allocation of financial resources, and be an important condition in the liberalization of China's capital account," said Ma Jun, chief economist at Deutsche Bank AG in China.

"These fundamental reforms will eventually improve economic performance."

wangxiaotian@chinadaily.com.cn