BEIJING, May 18 -- The National Administration of Financial Regulation (NAFR) was officially set up on Thursday as China's new financial regulator, marking an important step in the country's institutional reform on financial supervision.

The NAFR, directly under the State Council, is formed on the basis of the China Banking and Insurance Regulatory Commission.

The new administration is in charge of regulating the financial industry, with the exception of the securities sector. It will take over certain functions of the People's Bank of China and the China Securities Regulatory Commission.

Vice Premier He Lifeng attended the opening ceremony of the NAFR in Beijing on Thursday.

The establishment of the new regulator is seen as an important move to deepen structural reform in the financial regulatory sector, strengthen and improve the country's modern financial regulation, and promote full coverage of financial regulation in the sector.

The administration plans to dispatch 2,000 teams to inspect about 2,500 banking institutions, and nearly 800 teams to supervise about 800 non-banking institutions this year, according to an official budget document posted on its official website.

The plan to set up the NAFR was adopted by the national legislature in March.