Chinese authorities told the nation's state-owned banks, insurers and sovereign wealth fund to further curb compensation for their senior executives and slash expenses including travel as they step up efforts to rein in financial risks.

Base salary for senior executives should be capped at 35% of their total package, with over 40% of their bonus to be deferred for at least three years, the Ministry of Finance said in a notice this week. The pay increase for those in the middle-and-senior management positions should not exceed the average for all employees while the gap must be kept at "reasonable" levels to motivate frontline workers, according to the statement.

The move marks the latest step by Beijing to tighten oversight of the $59 trillion financial system as President Xi Jinping pushes for "common prosperity" in a slowing economy. Regulators in May told brokers to avoid handing out "excessive" short-term incentives to employees and smooth out the pace of pay disbursements.

The efforts also come as an anti-graft drive has brought down dozens of officials since its launch late last year. The nation's top disciplinary watchdog sharply criticized more than two dozen financial regulators, state banks, insurers and bad debt managers in a rare rebuke in February, saying corruption around key positions and sectors was prominent.

"Risk events and cases of law and discipline violations in the financial sector revealed that some firms still had issues including failing to strictly enforce financial and economic discipline," the finance ministry said in a separate statement, adding that the move was aimed at "plugging loopholes and fixing the weak links."

The ministry also urged financial institutions to beef up budget management and limit spending, including avoiding extravagant business banquets and lavish office decorations. They should also be more prudent in making overseas investments, according to the statement.

The Ministry of Finance's regulations on strengthening the corporate finance management of state-owned financial institutions stated that "financial institutions must live a tight life". It shows the responsibility of the MOF as a "funder" of state-owned financial institutions, and also implies that the MOF's role played in financial supervision and regulation is gradually increasing. This actually indicates that the overall financial supervision system is changing, and it is adjusted to the direction of "seamless connection" and "comprehensive supervision", according to the research at ANBOUND, an independent think tank.