The CBRC also threatened to report large banks with repeated cases of major fraud and irregularities to the State Council and the Communist Party's Organisation Department which controls the appointment of top bankers and bureaucrats.

Even officials of the CBRC's provincial and lower-level field offices will be held personally accountable for failure to curb irregularities at institutions under their watch.

The notice came after the Agricultural Bank of China (ABC), one of the Big Four state-owned commercial lenders, revealed it had disciplined 1,331 bankers in response to a state audit of its 2004 accounts last year that found 51.69 billion yuan of operational irregularities and 51 suspected criminal cases involving 8.68 billion yuan.

'The ABC audit might have stirred CBRC into action,' said Qiu Zhicheng, a banking analyst at Haitong Securities.

'Similar punishments might have been meted out on an ad hoc and less consistent fashion before,' added May Yan Meizhi, a senior analyst at rating agency Moody's. 'The latest CBRC notice will provide a more consistent guideline.'

Chiefs of bank branches tainted by major scandals must be asked to resign pending further investigations and disciplinary action, according to the CBRC instructions.

Instead of being rotated to similar positions elsewhere, top managers of branches with large or repeated irregularities must be sacked and other managers demoted, transferred or dismissed.

'In the past, they were frequently just transferred somewhere else for a while until the dust settled,' a mainland analyst said.

The CBRC ordered bank head offices to revoke lower-level offices' right to approve related transactions if there are two cases each involving a million yuan or more.

It also authorised its local offices to suspend financial institutions' local operations pending corrective actions to mismanagement and frequent irregularities.

Last month the CBRC's Shanghai office suspended the mortgage business of the Lujiazui branch of Shanghai Pudong Development Bank after the discovery of 126 million yuan in fraudulent loans.

Last year 5,065 Chinese bankers were punished over bank irregularities and fraud cases and 1,466 were disciplined for direct involvement.

Since then, major lenders such as Bank of China and China Citic Bank have been hit by scandals.

In a sector where the tendency has been to sweep dirt under the carpet, the recent public revelations of fraud have led some analysts to suspect the crackdown on banking irregularities to be part of an official initiative to supplement monetary tools to slow credit and investment growth.