Many of China's banks have maintained or raised their deposit rates after the central bank announced last week that it would allow the country's banks to set competitive deposit and lending rates.

The People's Bank of China said Thursday that lenders would have the flexibility to set deposit rates as high as 110 percent of the benchmark rate and offer rates on new loans as little as 80 percent of official policy rates.

The People's Bank of China also cut the benchmark one-year interest rates by 25 basis points on Friday to 3.25 percent in a bid to spur growth in the world's second-largest economy.

But despite the interest rate cut, China's five state-owned banks have maintained their one-year deposit rates at 3.5 percent.

Some commercial lenders, including China Minsheng Banking Corp. and China Merchants Bank, set their rates at 3.25 percent on Friday, but raised them to 3.5 percent one day later.

Meanwhile, some small lenders and city banks, such as the Bank of Nanjing and Bank of Ningbo, have set their rates at 3.575 percent, the top-end of the floating range of the benchmark deposit rate.

"Fears of deposit losses prompted small banks to set interest rates at high levels, as people prefer depositing money in larger lenders," said Guo Tianyong, professor from the Central University of Finance and Economics.

"With the deepening of the interest rate liberalization, we'll see more differentiated interest rates and more rates adjustments in the country's banking market in the future," Guo said.