The market of asset-backed securitization (ABS) is quite small in China and risks can be prevented through better oversight and transparency, central bank governor said on Saturday.

Responding to queries about the bank's ABS practice which might transfer risks in non-performing assets to other market players, Zhou Xiaochuan, governor of the People's Bank of China (PBOC), said it is a "market practice," and buyers are able to assess the risks.

Zhou explained that the assets bundled in ABS packages are usually priced lower than their original value and the buyers can take into consideration of the changes of their value in the future before striking a deal.

China's ABS started "relatively late" and the mortgage-backed securitization would be among the country's first step in tryouts, Zhou said at a press conference on the sidelines of the national legislature annual session.

Zhou said standardized operation and proper oversight are needed for the healthy development of ABS in China and the country is drawing lessons from the ABS process in the international financial crisis to forestall risks.

Pan Gongsheng, PBOC vice governor and head of the State Administration of Foreign Exchange, said there are a few pilot ABS programs in China that are carried out by some carefully-chosen financial institutions.

Pan said that the design of ABS products should be "simple, transparent and not multi-layered," and such products should be sold to institutional investors, not individuals.

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