BEIJING - The Chinese banking sector reported growing credit into the green sector and a lower bad loan rate amid surging green financing demand, according to the country's banking regulator.

The outstanding green credit of 21 major banks stood at 7.26 trillion yuan ($1.09 trillion) by the end of June, accounting for about nine percent of total loans, according to the China Banking Regulatory Commission (CBRC).

Outstanding loans for new energy, new energy vehicles and other strategic emerging sectors reached 1.69 trillion yuan while those for energy conservation and environment protection projects and services totalled 5.57 trillion yuan, which might save 187 million tonnes of standard coal, according to Ye Yanfei, a senior researcher with CBRC.

All the outstanding green credit was offered according to commercial standards without any government subsidies, Ye added.

Meanwhile, the bad loan rate for green credit stood at 0.41 percent by the end of June, about 1.35 percentage points lower than that of other loans during the same period.

China has decided to establish a green financing mechanism to facilitate the economy's transition to sustainable growth with guidelines to encourage more private capital into green sectors and stem investment that might pollute the environment.