BEIJING: China's bank regulator has called on the nation's banking sector to step up risk management and strengthen compliance as explosive credit growth is leading to greater risks.

"With bank loans growing rapidly, all kinds of risks are rising in the banking industry," Liu Mingkang, chairman of China Banking Regulatory Commission, said in the statement posted on the commission's website Friday.

"Financial institutes in the banking industry must do their upmost to uphold the standard management limits and strike a solid basis for risk management."

In an effort to counter the global financial crisis, Chinese banks issued 8.15 trillion yuan (1.2 trillion dollars) in new loans in the first eight months of the year, exceeding a five trillion yuan target set for 2009.

The aggressive lending has sparked concerns that some of the money has not been used to help the real economy, but has instead been put into asset markets for quick profit.

The country's stock market surged 90 percent in the first seven months of this year before tumbling nearly 20 percent in the past month as policy-makers urged a slowdown in credit. Home purchases in major cities also hit record highs in recent months.

Besides ordering the banking industry to set up compliance with regulatory rules, Liu also warned of upcoming changes in international finance regulation standards, the statement said.

Policymakers have acknowledged concerns that asset bubbles may be building up.

But Su Ning, the central bank's vice governor, said on Thursday that China would continue to implement an "appropriately loose" monetary policy into next year as the economy is still in a critical stage of recovery.