A Chinese clerk counts renminbi banknotes at a branch of China Construction Bank in Haian county, Nantong city, East China's Jiangsu province, Nov 22, 2014. [Photo/IC]

BEIJING -- China will implement the long-awaited bank deposit insurance scheme in May, according to an announcement on the government website on Tuesday.

Related story:

Changes are in store for depositors with bank insurance program by Jiang Xueqing, China Daily

The nation will launch a deposit insurance system during the first half of this year, and it is very likely to fully liberalize interest rates this year, People's Bank of China Governor Zhou Xiaochuan said during the two sessions.

Deposit insurance will protect the interests of savers and promote fair competition among large and small banks. It will cap coverage at 500,000 yuan ($79,857) for each client's deposits at each bank. Coverage of that scale will give full protection to 99.6 percent of the nation's depositors, the central bank said.

"We have finished gathering comments from banks on the introduction of the deposit insurance system. The feedback was generally positive. Conditions are ripe for launching the system," Zhou told reporters.

China is only one step away from freeing deposit rates for commercial banks. Effective March 1, the PBOC raised the deposit-rate ceiling to 1.3 times the benchmark rate from 1.2 times previously.

Yi Gang, deputy governor of the PBOC, said that deposit rates now become more differentiated among commercial banks of different sizes.

Some small financial institutions increased their deposit rates by 20 to 30 percent above the benchmark, while large banks only raised their rates by 10 percent. Among foreign-funded banks, 36 percent stuck to the benchmark, Yi said.

"After Chinese financial institutions, households, individuals and companies get accustomed to differentiated interest rates, the conditions for interest rate liberalization will become increasingly ripe," he said.