Shang Fulin, chairman of the China Banking Regulatory Commission (CBRC), said Friday that the agency is exploring more fundraising channels to help local banks replenish capital.

The banks will be allowed to retain more of their profits to expand their capital base, Shang said at the opening of the Lujiazui Forum, an annual financial conference held in Shanghai.

The CBRC and other departments are also actively exploring other options, including issuing preferred shares and raising funds overseas, Shang said.

Late last month, the CBRC rolled out a regulation encouraging private capital to buy stakes in banks to replenish capital and optimize the shareholding structure.

Many Chinese banks have faced capital shortages after explosive debt growth occurred following attempts to revive the economy in wake of the global financial crisis. Banks have faced more default risks since economic growth started to slow down last year.

China's banking industry implemented tougher regulatory measures, including a higher capital requirement, in January this year to promote sound growth and prevent systematic risks, the official said.