Mainland regulators should loosen their grip on commercial banks so lenders can accelerate market-based reforms and better prepare for overseas competition, said the People's Bank of China's deputy governor Wu Xiaoling. Ms Wu's comments are the latest sign that the central bank's views of banking regulations may not be in line with those of the China Banking Regulatory Commission. The CBRC has been tightly involved in the business of mainland banks, and as recently as June issued a notice requiring the banks not to cap lending growth at 15 per cent. The banking regulator also has been very quick to ban commercial banks from entering areas where operational risks may be too high. Ms Wu said banking regulators should be aware that their roles were to warn banks and financial organisations of potential risks, rather than burden or shield them from risks, the Shanghai Securities News reported yesterday. Commercial banks should have the freedom to make their business decisions based on risk assessments and market conditions, she said. Asian Development Bank economist Zhuang Jian said Ms Wu's remarks addressed one of the most prominent problems in the mainland's banking sector, but it would take much more work to fix it. 'Most commercial banks, even listed ones, are burdened with duties to facilitate investments proposed by the central government, which makes it hard to say that commercial banks operate solely by market rules,' Mr Zhuang said. He said that if an investment decision was forced upon commercial banks by bank regulators, both parties, of course, should take responsibility for the result. That was why bank regulators were so involved in bank operations. 'To ask bank regulators to loosen control over bank operations, the precondition has to be a fully market-oriented business environment,' Mr Zhuang said. 'Otherwise decreased supervision may not necessarily be good news.'