The central bank is likely to announce rules covering the fast-growing Internet finance sector by midyear, a member of the Chinese People's Political Consultative Conference said on Monday.

"The central bank has arranged several meetings involving banking, insurance and securities regulators," said the anonymous CPPCC member, who has knowledge of the discussions.

Appropriate regulations are crucial for the industry's development, according to Li Daokui, a Tsinghua University professor and former central bank adviser.

"There must be reserves for Internet financing products, and specific regulations and customer protections are needed," according to Li.

According to Liao Min, director-general of the China Banking Regulatory Commission's Shanghai Office, it's important that the regulations reduce risks connected with the rapidly growing sector.

Deposits with Yu'ebao, a popular online financing product, hit 400 billion yuan ($65.6 billion) on Feb 14, up from 250 billion yuan on Jan 15, according to Zhou Xiaoming, vice-general manager of Tianhong Asset Management Co Ltd.

Yu'ebao was formed through a partnership between Tianhong and the Internet giant Alibaba Group Holding Ltd.

Regulations for online financial companies should be in line with those for the traditional financing industry, such as those for prudential supervisory requirements, information disclosure and customer protection requirements, Liao said.

He added that establishing a clear and efficient dispute resolution mechanism in line with international practices between customers and online financing entities is also essential.

"Other ways to regulate the sector include license management and conduct supervision," Liao added.

Li Kemu, vice-chairman of the China Insurance Regulatory Commission, said that more licenses will be gradually granted to online insurance companies.

At present, there is only one online insurance company. But regulators will slowly ease access to the market, according to Li, a member of CPPCC.

As of the end of last year, 60 insurance firms in China had expanded to online sales channels, up 46 percent from two years earlier, according to a report by the insurance regulator.