China is asking financial institutions to set aside more capital as the minimum level of reserves starting on July 1 to counter risks, Chinese media reported on Wednesday.

The required percentage of reserves to total risk assets will be increased to 1.5 percent from the current 1 percent, Xinhua News Agency quoted the Ministry of Finance as saying.

Under the new rules, a risk factor for loans will be applied to the financial sector, which stands at 1.5 percent for normal loans, 3 percent for those noted for attention, 30 percent for subordinate loans, 60 percent for suspect loans and 100 percent for loss-making ones.

The government will adjust the requirements based on economic cycles to provide cushions for the financial companies, it said.

Analysts said the new rules would not affect commercial lenders much because the China Banking Regulatory Commission required banks to set aside provisions of minimum 2.5 percent for total loans and 150 percent for total bad loans.