The committee has formed after the failure of one of the products which led to increased scrutiny of banks liabilities.

The risk committee, called The China Banking Association Specialist Committee on Wealth Management Products, consists of senior banking executives.

The committee will tighten standards over the sale and risk management of the investment products, which are highly sought after by depositors seeking higher interest rates, Reuters report said.

Du Jinfu, the head of the discipline commission at the China Banking Regulatory Commission said that as of the end of September 2012, the amount of outstanding wealth management products distributed by Chinese banks had reached US$1.08 trillion, which is an increase of 47% over the end of 2011.

Jinfu added that wealth management products distributed by banks made up 18% of the total social financing in the first three quarters.

He also warned that some banks do not follow regulations when selling wealth management products, highlighting inappropriate promotions, not handling customers’ complaints properly or not disclosing information completely.