Growing jitters about the financial health of bloated mainland industries have prompted many banks to cut lending in these sectors by as much as 20%.

Banking and industry sources said that at the same time, the China Banking and Regulatory Commission has called on banks to submit their regular report of outstanding loans owed by various sectors but has asked them to include loans linked to derivative products and debt financing.

The inclusion of these two areas is a new development. The move, which comes in the wake of a landmark corporate bond default by Chaori Solar Energy Science & Technology as well as the default of a coal related high yield trust product, underscores the regulator's concerns about financial risks posed by heavily indebted sectors, such as steel makers and shipbuilders.

Bank source said that the specific sectors to be audited are steel, cement, aluminium smelting, flat glass and shipbuilding. It was not clear what derivatives lending or debt financing the CBRC was focusing on. But one area of concern may be bank lending to clients who used commodity imports such as steel or copper as collateral.

The CBRC has not set any targets for a reduction in lending, but banks started to cut loans to struggling sectors late last year. Some steel mills received letters from their banks this month telling them that their 2014 credit limit would be 20 per cent below the amount they borrowed in 2013.