Lending by Chinese banks during the past two years has been excessively fast, topping the extreme upper limit set by regulators, the country's banking chief said at an internal meeting, a source told Reuters on Tuesday.

The unusually sharp warning by Liu Mingkang, head of the China Banking Regulatory Commission, highlighted deepening official unease about the threat that rampant credit growth poses to the Chinese financial sector and the broader economy.

China's banks issued a total of 17.5 trillion yuan ($2.7 trillion) of new local currency loans in 2009 and 2010, almost a quarter of the economy's total output during that time.

The government kick-started the lending binge at the height of the global financial crisis, when it called on banks to unleash a blast of credit to power the Chinese economy to recovery. But with growth once again soaring, it has been struggling to bring credit issuance back to a more normal pace.

That sense of exasperation was captured in Liu's words.

The scale of new loans has increased incredibly fast, even doubling, in just a short period, but the expertise and efficiency of loan officers can't have doubled at the same time, he said, according to the source who attended the meeting.

Liu made the comments to China's top bankers in a first-quarter planning session in mid-January. No local or foreign media previously reported them.

He warned that irrational factors in the Chinese real estate market had increased and that credit risks were accumulating.

He also told banks that they could not extend or roll over loans to local government financing vehicles when they expire this year, the source said. China has been trying to clean up local governments' books after they incurred piles of debt in the course of stimulating the economy to recover from the global financial crisis.

Despite Liu's harsh tone, Chinese analysts downplayed worries about the country's banks, saying it was the regulator's style to cast a spotlight on blemishes to nip problems in the bud.

The regulator aims to prevent risks in a forward-looking approach, so this does not mean that credit risks are serious in the banking system, said Jin Lin, a banking analyst at the Orient Securities in Shanghai.

Instead, I think credit risks are manageable, as the banking regulator has been consistently taking powerful measures and has achieved good results, Jin added.