Bank authorities are urging that non-performing loans be written off, particularly in areas of acute overcapacity, according to a statement on the banking regulator's website on Monday.

Shang Fulin, president of China Banking Regulatory Commission, also stressed the importance of sustainable financing at a meeting in Fujian province.

"We must make more efforts to prepare for a possible rise in non-performing assets and explore market-based options to pack and transfer bad loans," said Shang.

"Banks must also seek various channels to clean up bad loans by industries with overcapacity to prevent new risks from brewing."

China's "Big Five" State banks earlier reported a total of 404.7 billion yuan ($70 billion) in NPLs in results for the first three quarters, up 58.5 billion yuan year-on-year.

Credit support cannot be given to new projects in industries troubled by severe overcapacity, the CBRC said. Banks are also prohibited from providing credit to such projects through wealth management products.

Shang also called for improving the credit surveillance system and regular risk control reports of industries plagued by overcapacity to guard against any potential crisis.