BEIJING - China's central bank deputy governor Pan Gongsheng said the country will "actively explore" the securitization of bad assets on Friday as part of efforts to limit risks in the financial system.

The move would widen channels for commercial banks to dispose of their bad loans, which is conducive in improving their asset quality, Pan said at a press briefing.

The securitization is a process where banks' bad assets could be sold in the form of securities in the capital market to generate liquidity and redistribute capital.

Data on Thursday showed China's banking sector's non-performing loans grew to 1.43 trillion yuan ($234.1 billion) and the bad loan rate rose to 1.6 percent by the end of 2014, up from the 1.49-percent rate registered by the end of 2013.