The nation's securities regulator is to review Agricultural Bank of China (ABC)'s application for a mega initial public offering on Wednesday; it is imperative to clarify the purpose of the float in order to still a jittery market still recovering from a recent slump.

If the purpose of raising funds is chiefly to enhance the rural lender's capital base, the effort will not be worth the big hubbub it has attracted so far.

The IPO by the last of China's "big four" State-owned lenders was widely anticipated to fetch as much as $30 billion from the Shanghai and Hong Kong stock markets, and touted to be likely the largest such in the world.

Yet, the volatile state of the current markets and investor worry that such a mammoth call for funds may drain liquidity from the market, are making the prospects look bleak for ABC's float.

Although the government recently unveiled tax cuts for rural lenders - a policy crutch directly expected to boost the profitability of its relatively weak rural operations - investor concerns regarding the scale, timing and cost of the float must be addressed immediately.

It is only reasonable that investors would seek a fair buy that will not rock the market too much. That said, the more pertinent question policy-makers must answer is why all the four State-owned lenders have been permitted to tap public funds.

By and large, public and strategic investors have turned State-owned banks into nimble commercial entities, and permitting them to co-own these lenders was part of government reform aimed at efficiently allocating scarce funds across sectors.

That Chinese banks have generally emerged from the global financial crisis better off than peers in developed countries does not mean they have obtained superior risk management skills.

If ABC's offering is devised at shoring up its capital adequacy ratio to help it become a "super-sized" financial institution rather than to improve its management or business model, the endeavor may just turn out to be a waste of time and money.