Huarui Bank, Shanghai's first private bank, will officially start operations in the first half of this year, said Wang Junjin, leader of the preparatory team and chairman of the JuneYao Group.

The bank launched a pilot operation last month as China gradually opens up the State-dominated banking industry.

Compared with the bank's first outlet in Shanghai's free trade zone, the second in downtown Lujiazui which will be larger and with more advanced technology is in preparation, Wang, a National People's Congress deputy, said in Beijing on Tuesday.

Wang said private banks are not challengers to State-owned ones. The government has allowed the establishment of private banks in a bid to try new approaches, serving small and micro businesses, he said.

"It is not necessary to worry about the bank in terms of policies. The first step is the hardest, but it is always important to take the first step," he added.

Huarui Bank offers a full range of services including deposits, lending, bank cards, foreign exchange and bonds, according to the Shanghai office of the China Banking Regulatory Commission.