Madrid.—Spain has unveiled plans to rein in the regional savings banks blamed for triggering its financial crisis, the latest step in an overhaul of its bailed-out banking sector.

The government launched a bill to restrict the so-called “cajas” to lending to individuals and small businesses within their region, it announced after a cabinet meeting. The cajas, traditionally local savings banks, branched out beyond their regions and into real estate loans during Spain's decade-long building boom that went bust in 2008. “What we are trying to do is return to the traditional model of savings banks -- a traditional model that somehow got distorted in recent years and was the basis of the problems in the Spanish financial model,” Finance Minister Luis de Guindos told a news conference.

The bill is one of the measures Spain promised to European authorities last year in return for tens of billions of euros to save its banking sector from collapse.

It plans to limit a savings bank's assets to 10 billion euros, the economy ministry said in a statement detailing the plan. If a caja exceeds that size, it will have to submit its financial activities to tighter controls.

The plan also aims to place control of the savings banks firmly in the hands of depositors, shielding the boards from political influence.