China's top banking regulator Liu Mingkang urged the country's joint-stock commercial banks on Friday to strengthen management over risks and closely monitor the flow of capital to prevent credit risk.

Liu's comment came as concerns over risks in the country's dramatic increase in new loans remained, though new loans in July fell sharply from earlier months.

"We should be clear-headed that the current situation remains very grim," Liu said at a joint conference of presidents of the country's joint-stock banks.

All banks should pay close attention to new developments in the economic and financial sectors, and carefully watch risks and factors that may impact the stability of the financial system, Liu said.

Despite a slower growth in lending last month, new loans made by Chinese banks topped 7.73 trillion yuan (US$1.14 trillion) in the first seven months, far exceeding the annual target of 5 trillion yuan.

China's central bank had repeatedly said in the past month it would maintain the moderately easy monetary policy to support the economy, but has also asked lenders to tighten risk monitoring and risk control.

(Xinhua News Agency August 15, 2009)