(Yicai Global) Aug. 21 -- China Banking Regulatory Commission's effort to crack down on financial irregularities has seen an early success as fewer funds are taken out of the real economy and interbank lending shrank for the first time in seven years.

Irregularities in the financial economy mainly focus on the interbank market, wealth management and off-balance-sheet business, said Xiao Yuanqi, an official at the commission's Prudent Regulation Bureau. These three areas have all seen explosive growth over the past few years, with some increasing as much as 100 percent. Idle funds are the most prominent in these areas, which prevent money flowing into the real economy.

Idle funds are those which are moved within the financial economy without entering the real economy. This leads to rising financial costs for operators in the real economy and higher levels of risk.

By clamping down on banking irregularities, we can standardize the industry and prevent funds from leaving the real economy to enter the financial economy, said Xiao. "The final goal is to improve the banking industry's ability to serve the real economy efficiently. The move should also ensure risks remain under control to safeguard the market's smooth operation."

Since CBRC began to normalize these irregularities, both interbank assets and liabilities in the banking sector have fallen, marking the first time since 2010 the interbank has dropped since 2010. The growth of wealth management products also slowed to single digits with the balance of such products dropping by CNY1.9 trillion (USD283.6 billion). In the first half, the balance of loans held by banks was CNY123.5 trillion (USD18.5 trillion), up 13.2 percent on the year and 1.7 percentage points higher than the growth of assets in the same period, the first time it's been above asset growth since 2015.