The Chinese central bank will tighten regulations on large financial holding companies to control leverage levels and prevent systemic risks, according to a People's Bank of China (PBOC) statement on Friday.

The bank has published a set of draft regulations and sought public opinion.

The draft defines financial holdings companies as those specializing in financial institutions' equity investment and management.

They are forbidden to conduct non-financial business in order to prevent risk contagion.

The State Council, the country's cabinet, will issue administrative licenses for financial holding companies, while any without a license will need to cease business.

The PBOC, the central bank, will be the regulator, said the statement.

"In practice, some financial holdings groups consider their controlling financial institutions as cash machines", while financial risks are accumulating and exposing, it said.

During the past years, large financial holding companies were expanding fast in China, some even via illegal measures.

The new rules, as the central bank said, will focus on consolidated supervision, to control the overall capital and leverage levels in large financial groups, and to curb risky internal and connected financial transactions.

Some business groups will be required to transfer shares between shareholders and reorganize ownership structure.

Financial holding groups can invest in certain financial institutions, but need to get regulators' approval.

The book value of aggregate investment should be no more than 15 percent of the groups' net assets, according to the regulations.