China's banking watchdog issued a notice on Monday ordering the nation's commercial banks to set up an accountability system.

The move comes after the National Audit Office reported last week that auditors found 51 cases of criminal activities at the Agricultural Bank of China, one of China's "big four" state lenders, during an investigation into its 2004 financial statements.

Heads of banking institutions involved should be the first to accept responsibility and resign in severe cases of misconduct cases, before being punished in light of further investigations, the China Banking Regulatory Commission said.

The "major leaders" are forbidden to act as managers of peer institutions, the notice added.

The Agricultural Bank has immediately disciplined 1,331 people and helped prosecute 21 involved in frauds revealed in the NAO report.

The CBRC also warned that it would report big commercial banks which see frequent abuses to their shareholders, and even directly to the State Council, China's Cabinet.

State banks are planning to become joint-stock companies and seek market listing to help streamline operations. Under a WTO commitment, China is to fully open its financial market to foreign competition by the end of this year.

Source: Xinhua