China's foreign exchange authority has granted 4.8 billion dollars in overseas investment quotas as part of efforts to allow the greater convertibility of the yuan.

The approval marked the first time that the State Administration of Foreign Exchange (SAFE) has allowed state commercial banks to invest funds in overseas investment projects on behalf of their clients, Xinhua news agency said Sunday.

The Bank of China was given 2.5 billion dollars in quotas, the Commercial Bank of China received 2.0 billion dollars and the Bank of East Asia was awarded 300 million dollars, the report said.

Other banks have also applied for quotas, it said.

The approval was granted under a "qualified domestic institutional investor" (QDII) scheme, set up in recent years as a way to help the government dispose of growing foreign reserves, which are expected to reach an unprecedented 1.0 trillion dollars by year's end.

After receiving the quotas, the three banks will be able to exchange the yuan for dollars for overseas investment.

The move by SAFE is expected to move the yuan further toward free convertibility -- a stated goal of the government, despite long-term efforts to maintain a stable exchange rate.

"Due to expectations on further Renminbi (yuan) appreciation, huge amounts of foreign exchange rushed into China in recent years, pressuring the Renminbi to go even higher," the report said.

"The QDII policy will help domestic funds to go out (of China) and alleviate the pressure."