China's cash-strapped banks may soon get a injection of capital, thanks to fiscal funding not a loosening of government policy.

More than 1 trillion yuan (about 158.2 billion U.S. dollars) of treasury deposits are expected to be allocated by the Ministry of Finance (MOF) to government departments in November and December, according to a report by China International Capital Co., Ltd. (CICC), the country's top investment bank.

China allocated 700 billion yuan of deficit in the 2011 Budget adopted in March this year.

MOF data showed fiscal revenues amounted to about 1.2 trillion yuan between January and September. That implies fiscal expenditure will top 1.9 trillion yuan in the fourth quarter of this year.

As the massive fiscal funding was made near the year-end in the past years, CICC predicts the country's banks will boost their capital strength by 1.2 trillion yuan.

Liquidity conditions for Chinese banks started to improve since the beginning of November, after People's Bank of China (PBOC), the country's central bank, stopped draining liquidity from banking sector through its open market operations this week.

Last week, PBOC released 96 billion yuan of cash into the money market in its first liquidity injection through open-market operations in four weeks.

Expectations of a partial easing of the country's credit-tightening measures have heightened in recent weeks after Premier Wen Jiabao said on Oct. 25 in the northern municipality of Tianjin that the government will fine-tune its macro control policies "when the time is right."

In China's money market, the Shanghai Interbank Offered Rate (Shibor), which measures the cost for banks to borrow from one another, of different terms headed for different directions on Monday.

Overnight the Shibor edged up 0.33 basis points to 3.0933 percent, while the Shibor for one-week and two-week rose 7 basis points and 2.04 basis points to 3.5683 percent and 3.6296 percent, respectively.

The one-month Shibor weakened 15.33 basis points to 4.9242 percent, indicating banks' liquidity outlook in the coming month.