The State Council, or China's cabinet, on Friday approved a pilot plan allowing Chinese banks in the Shanghai Free Trade Zone (FTZ) to conduct offshore business in a move to further liberalize the country's financial market.

It means Chinese banks in the zone will be permitted to provide services to depositors who are residents in other countries.

This move will be realized on condition of effective oversight, according to the detailed guideline unveiled by the State Council.

Shanghai FTZ, which serves as a test ground for financial reforms, will also let eligible foreign-funded financial institutions to set up banks, and team up with qualified private banks to establish joint-ventures.