BEIJING - China's top banking watchdog on Thursday gave the Bank of China (BOC) the first approval of issuing perpetual bonds by commercial banks.

The BOC will be allowed to issue bonds worth up to 40 billion yuan ($5.9 billion), according to the China Banking and Insurance Regulatory Commission.

The new instrument can help banks replenish capital, improve capital structure, expand lending and boost risk resilience, the commission said.

It will also enrich investment products in the bond market and meet the demand of investors, according to the commission.

A perpetual bond is fixed income security with no maturity date that is not redeemable but pays a steady stream of interest.