China will deny bank loans to companies violating environmental rules under a 'green credit policy' in an effort to tackle worsening pollution, the state media reported on Thursday.

"Under the new policy, companies who fail to pass environmental assessment or fail to implement China's environmental protection regulations are disqualified from getting loans from any bank or financial institution," Vice Director of the State Environmental Protection Administration Pan Yue said.

Companies that have already received loans but are later discovered to have violated China's environmental protection regulations will also have to return their loans, Pan said.

China's deteriorating environmental situation has spurred the Chinese government to find solutions. Pan said other economic policies including insurance and security policies targeting environmental protection will be released as soon as possible, Xinhua news agency reported.

Another economic policy is to increase sewage treatment fees to tackle water pollution, he said.

Current sewage treatment fees collected from both individuals and companies are too low to tackle water pollution, he said.

"Sewage treatment fees collected both from individuals and companies will be raised so as to have enough funds to cover the cost of sewage treatment," Pan said.

"Higher sewage treatment fees will be imposed on energy-consuming and polluting companies," he said. On Tuesday, the Sepa blacklisted 32 polluting factories and six sewage works it had found to be in violation of environmental regulations.