"We will watch closely on the actual effect of the policy of interest rates increase," said Si Kaiwen, director in charge of retail business of the Gaoxin sub-branch of the Anhui Branch of the Bank of China. "And trying to draw more deposits will still beour first and foremost task in the near future."

The People's Bank of China, China's central bank, has raised the benchmark lending and deposit interest rates by 0.27 percentage point as of Friday. The one-year deposit interest rate will increase from 1.98 percent to 2.25 percent, while the one-year lending interest rate will rise from 5.31 percent to 5.58 percent.

Financial insiders agreed that besides curbing inflation and overheating investment the higher interest rates will help attract more deposits.

Since the beginning of this year, people withdrew their deposits, deciding instead to invest in other assets. The fact of a downward trend of residents' deposit has aroused worry of banks.

Statistics from the central bank showed that in the January-September period deposits totaled 2.7 trillion yuan, 499 billion yuan less than the same period last year. Of which, the increment of residents' deposit was 1.2 trillion yuan, 207 billion yuan less than in last year's same period.

Economists predicted that if the trend continues, the residents' deposit, which has witnessed nearly 10 years of high-speed growth will face a turning point at the end of this year.

The National Bureau of Statistics analyzed that the split-flow of capital ran to four sectors, namely, other financial investment channels like stocks, mutual funds and treasury bonds markets, consumption, real estate, and non-official financial system.

Insiders noted that since early this year, China has entered the era of negative interest rates in real term. As the deposit interest rates is lower than the actual consumer price index increase, residents are more and more reluctant to put their money in banks and waiting for the depreciation.

Statistics from the National Bureau of Statistics shows that inthe first three quarters of this year, the consumer price index rose 4.1 percent on a year-on-year base.

Tang Min, Chief Economist of the ADB (Asian Development Bank) Resident Mission in China, said the split-flow of capital is a "good thing" in the long run.

"With the development of capital markets, more and more investment opportunities occur, there will always be some money which will flow out from the banks to these new channels," noted Tang.

Though experts' opinions on the merits of split-flow of capital differ, they agree that the split-flow in Chinese commercial banks,which rely heavily on residents' deposits, means a risk in capitalliquidity.

"The decrease of residents' deposit will affect the capability of commercial banks in providing loans," said Zhang Ziduo, director of Economic Institute of the Anhui Academy of Social Sciences.