(Yicai Global) Sept. 20 -- Small and medium-sized lenders in China, including Bank of Nanjing and Bank of Qingdao, are speeding up credit card issuance to focus on retail business amid tightening regulations.

In the first half, top credit card issuers such as large state and joint-stock banks slowed new issuances due to an increase in the ratio of defaults and new regulatory hurdles, which provided smaller rivals with more room to grow, Hu Caimei, deputy director at a state-owned assets center under the China Development Institute, said to Yicai Global.

Bank of Nanjing recorded an 18 percent increase in total credit cards as of June 30 from six months ago, the eastern financial institution revealed in its interim earnings report.

Bank of Qingdao logged a 12 percent gain in its corresponding tally during the same time period, based on the Shandong province-based firm's earnings report.

Zhejiang Shaoxing Ruifeng Rural Commercial Bank and Jiangsu Zhangjiagang Rural Commercial Bank each reported over 10 percent additions.

An employee of a regional bank in Guangdong province said to Yicai Global that the branch was instructed to issue many more credit cards than last year, and some branches were asked to almost double the volumes to nearly 2,000 cards this year.

Small-scale lenders aim to cope with the competition and accelerate their transformation and development, Hu at the think tank said. In retail banking, issuing credit cards is a key tool for acquiring customers, and the related fees and interest are important sources of revenue, she added.

As economic growth slows, not-big banks are facing tamed growth in their corporate and interbank business, Hu said. Meanwhile, financial regulations are becoming increasingly strict and large banks continuously roll out new fintech services so retail business is becoming key for small and medium-sized banks' transformation.

The regulation is indeed becoming tighter as in July. The China Banking and Insurance Regulatory Commission and the People's Bank of China said that commercial banks need to clean up credit cards that have not been used for long. The state institutions banned lenders from using card issuances, numbers of customers, and market share or rankings as their main performance indicators.

The same bank employee in Guangdong said that the lender did try to follow the instructions even though it focused on prompting the clients to use their cards more frequently instead of directly canceling the service. The guideline encouraged the bank to boost credit card activation and enhance customer retention, the person added.

Editors: Tang Shihua, Emmi Laine, Xiao Yi