The seven banks that applied for retail licenses were Citigroup, Mizuho Corporate Bank, HSBC, Standard Chartered, ABN Amro Holdings, DBS Bank and Hong Kong's Bank of East Asia and Hang Seng Bank, the China Banking Regulatory Commission revealed.
The household savings market in China is thought to be worth $4 trillion, but foreign banks until now have only been allowed to focus on the foreign currency banking.
Initially the banks are set to focus on the higher end of the market around China's major cities.
The Times reports that Deutsche Bank, Sumitomo Bank, Bank of China (Hong Kong) and Credit Suisse will all also submit applications in the near future.
China Banking Regulatory Commission has also cleared Credit Suisse and BOC Hong Kong to offer offshore investment products to Chinese clients.