Most Chinese lenders are state-controlled and banks founded by private companies are extremely rare, while access to lending is a key element of the Communist authorities' control of the economy.
At a key meeting in November the ruling party listed opening the banking industry to private investors as one of its major reform policies for the financial sector to introduce competition and help small enterprises obtain loans.
"We have selected a few private capital (investors) to jointly participate in the trial programme of (the setup of) five banks in the first batch," Shang Fulin, chairman of the China Banking Regulatory Commission, told reporters.
He was speaking at a briefing on the sidelines of the annual session of the National People's Congress, China's Communist-controlled legislature.
Alibaba and Tencent, which have been expanding their online finance business in recent years, Shanghai-based conglomerate Fosun, auto parts maker Wangxiang Group and six other private owned companies have been chosen to be the investors, the People's Daily quoted Shang as saying in an interview.
Each bank will have at least two "founders", Shang said at the briefing.
The banks will be operating "independently", he said, and will assume responsibility for risks and losses as well as profits, he said.
They will focus on "serving small and micro-sized companies and the community", he added.
Shang did not give a timetable for them to start operations.
"We will push forward the trial of the five banks in a prudent manner, approving one only after it is ready to go," he said.
"That means the timing of their launch of operation mainly depends on themselves." Another key item on Chinese authorities' reform agenda is allowing banks to decide on their own interest rates on deposits, after they loosened controls on lending rates last year.
China's central bank chief Zhou Xiaochuan said at the same briefing that was expected within two years.
"The liberalisation of deposit rates is definitely within our plan. I personally think it is very likely to be realised in the next one to two years," he told reporters.