FILE PHOTO: Guo Shuqing, China banking regulator, attends a news conference ahead of China's parliament in Beijing, March 2, 2017. REUTERS/Shu Zhang

SHANGHAI (Reuters) - China’s banking regulator has urged lenders to devolve responsibility for loan approvals in order to boost credit to small and micro businesses, but also emphasized that risks need to be kept under control.

Guo Shuqing, who was appointed chairman of the regulator in February, said it would also explore preferential policies to alleviate poverty and spur industrial development to help smaller businesses.

Guo’s comments were made at a forum on Friday, the China Banking Regulatory Commission said in a statement on its website.

“Banks and financial institutions are encouraged to, under the premise that risks are controllable, to decentralize credit approval authority,” it quoted him as saying.

China launched a plan last year to promote “inclusive’ finance” with a target of launching financial services across all rungs of society, and has urged state-owned banks to take the lead.

However, it has in the past had difficulties in supervising the micro-finance sector, especially in the unruly peer-to-peer lending sector which was found to be riddled with runaway managers and pyramid schemes last year.

Guo said that China’s largest banks will have established “inclusive finance” departments by the end of this year.