China's move to regulate internet finance is a positive step towards legitimising a sector that has largely operated in a vacuum, analysts say, but the rules also reflect the government's support for incumbent banks.

Ten agencies including the central bank, the banking regulator and the securities regulator jointly issued guidelines this month that provide an official definition of "internet finance" and specify which agencies are responsible for regulating which types of internet financial institutions.

The rules will support the growth of online financial services such as online payments, peer-to-peer lending, crowdfunded equity finance, and asset management by creating a clear regulatory framework under which they operate, cleansing their reputation as fly-by-night operators.