China's top banking regulator has promised to deliver basic financial services to every town across the country within three years in an ambitious programme supported by China's largest state-owned banks.

“The problem of inadequate rural financial services in less developed areas is still very prominent, and in the remote township level is even more apparent,” Liu Mingkang, chairman of the China Banking Regulatory Commission said on Friday.

Mr Liu said the aim was to provide financial services for every town-level administrative region. China has 35,000 town and township-level administrative areas, each of which has a population of roughly 20,000.

Beijing has encouraged the spread of financial services to rural areas in recent years after commercialised state-owned banks spent the past decade shutting many of their rural branches to concentrate on more profitable urban expansion. But on the orders of the central government those banks are now searching for new markets and customers in the rural areas they previously shunned.

Guo Shuqing, chairman of China Construction Bank, the second largest Chinese lender by assets, said the bank was intent on increasing rural services and was especially interested in providing loans to small companies and peasant farmers involved with agricultural reclamation projects.

“For banks this is a revolutionary change as we have been focused on large-scale lending in the past,” Mr Guo told reporters on Thursday.

Mr Guo said his bank and the other large state lenders were training staff and reorienting their services to cater more to smaller companies and rural borrowers, partly in response to Beijing's policy directives.

At the end of June, 3,000 Chinese towns had no banking outlets, with one quarter of those having no financial services whatsoever, according to figures from CBRC.

A rough calculation based on the regulator's data suggests that 60m people do not have ready access to banking services, with 15m of those having no access to any financial services.

“Even for those [in rural areas] who are covered by financial services, many are dissatisfied by the uneven and often inadequate offerings and the overall level is not high,” Mr Liu said.

Mr Liu stressed the need to provide innovative products to rural and township areas, saying China would promote unsecured micro-credit, expand credit card services and promote the use of forestry and fishing rights as loan collateral.

Even large foreign banks such as Citibank, HSBC and Standard Chartered have heeded Beijing's call to expand into the hinterland, setting up their own rural banking branches in one or two locations.

But the enticing prospect of more than 700m underserviced rural customers belies a history of unprofitable and scandal-plagued rural financial institutions in China, including a slew of rural credit co-operatives that some analysts believe are mostly insolvent.

As Mr Guo pointed out, the per capita consumption of China's rural population runs at about one fifth the level of urban consumers, making them far less attractive as customers to the world's largest banks.