Regulators have declared that they will normalize private banks, as there is a new wave of banks applying for such licenses.

Chongqing Financial Affairs Office made an announcement on Wednesday that China Banking Regulatory Commission approved the proposed private Fu Min Bank, a name denoting enriching people. It will be the first private bank in central and western China.

The bank would be co-founded by several Chongqing-based private companies, such as Zongshen Industrial Group Co, China's largest motor manufacturer, and Hanhua Financial Holding Co, which claims to be the first domestic inclusive financial investment group entering the international capital market.

Fu Min Bank is positioned as an inclusive financial bank to service small and medium-sized corporations. The business mode is to help small companies and start-ups in Chongqing, and get them connected.

The application process had lasted for two years, an officer revealed, and the bank is projected to be incorporated with registered assets of 3 billion yuan ($458.7 million), just like the other five private banks established years ago. The bank chairman and president are yet to be confirmed.

The biggest shareholder-to-be is Hanhua Financial Holding Co Ltd, which listed in Hong Kong and achieved a total of 14 billion yuan ($2.13 billion) in assets by the end of 2015.

The banking industry has been, unavoidably, exposed to several problems, such as shrinking interest margins and bad assets. Besides, private banks' survival is also challenged by the traditional commercial banks.