China closes 670 rural banks in financial sector overhaul

China’s top financial regulator reported a sharp decline in the number of legal-entity financial institutions in 2025, led by the elimination of 670 rural small and midsize banks, reports Caixin. The came as authorities pressed ahead with a broad sector overhaul.

The National Financial Regulatory Administration said on Friday that the number of legal-entity financial institutions fell by 711 from the end of 2024 to 6,489 at the end of 2025. Rural small and midsize lenders accounted for most of the decline, with their ranks shrinking 18.6%. Numbers in other categories were largely unchanged, aside from the disappearance of one city commercial bank, one direct bank and eight nonbank financial institutions.The consolidation underscores Beijing’s escalating effort to contain risks in the country’s fragile regional banking system through mergers and acquisitions, creating larger and better-capitalized institutions to help withstand economic pressure