China's top banking regulator has approved the commencement of business of the first direct bank that will operate as an independent legal entity in China.

The bank－which will not have any branch network, and offers its services remotely via online banking－will officially open within six months after it obtained a business license, according to banking regulations.

Jointly founded by China CITIC Bank Corp Ltd and Chinese internet search giant Baidu Inc with registered capital of 2 billion yuan ($300 million), CITIC aiBank Corp Ltd will mainly target individuals as well as micro and small companies. China CITIC Bank, a national joint-stock commercial lender, will hold 70 percent of its shares, and Fujian Baidu Bo Rui Netcom Science and Technology Co Ltd will hold the remaining 30 percent.

"CITIC aiBank is a strategic deployment of China CITIC Bank's transformation and a strategic move by Baidu to seize opportunities in financial technologies," China CITIC Bank said in a news release on Monday.

"The new bank will combine Baidu's technological advantages in artificial intelligence, big data and cloud computing with China CITIC Bank's advantages in financial risk management, product development and offline channels ... to build a smart and inclusive bank in an online plus offline and bank plus business model by exploring an innovative approach of internet plus finance," China CITIC Bank said.

Zeng Gang, director of banking research at the Institute of Finance and Banking under the Chinese Academy of Social Sciences, said: "The regulatory approval of CITIC aiBank signifies innovation within banking institutions in adaptation to the growth of the internet-based economy. It will open a new space for traditional banks to do business and risk control online, thus better serving the real economy. And the regulators will also experiment with issuing more direct banking licenses."

As an independent legal entity rather than a department of a bank, a direct bank will not be restricted by the bank's existing management approach. With independent accounting, it could find a completely different mode of development that will better suit the internet age, he said.

The China Banking Regulatory Commission also approved the qualification of Li Qingping, chairperson of China CITIC Bank, as chairperson of CITIC aiBank and Li Rudong, former deputy general manager of China CITIC Bank's e-banking department, as president of the new bank. Senior executives of China CITIC Bank took four seats out of six as CITIC aiBank's directors.

So far, all three largest Chinese internet companies, namely Baidu Inc, Tencent Holdings Ltd and Alibaba Group Holding Ltd, have obtained their own banking licenses.