BEIJING, Feb. 23 -- China has banned local governments from borrowing from banks to finance land purchases and preparations for property development, an official statement said on Tuesday.

Local governments must reduce the number of institutions responsible for land reserve, whittling down the many departments to just one, according to the statement, which was jointly issued by the Ministry of Finance, the Ministry of Land and Resources, the People's Bank of China and China Banking Regulatory Commission.

Land reserve institutions should no longer have financing, construction or land development arms, these departments should be closed or turned into enterprises, it said. This task should be finished before the end of this year, the statement stressed.

Governments with large swathes of land should slow down or even stop adding new reserves to improve land use and cut debt pressure, according to the statement.