Taiwan and China on Monday agreed to further ease investment caps in each other's financial institutions, in the latest sign of warming ties between the two former rivals, officials said.

Individual Chinese banks will be permitted to acquire up to 10 percent of a bank listed in Taiwan, up from five percent, according to a statement released by the island's banking regulator Financial Supervisory Commission.

Total Chinese shareholdings may go up to 15 percent after a five percent ownership cap for investors under the Qualified Domestic Institutional Investors scheme is included.

Taiwanese banks, meanwhile, will be allowed to expand their business into rural areas of the Chinese mainland, it said, without specifying when the new regulations would go into effect.

The statement described the agreement, arrived during a closed-door meeting in Taipei by officials from the commission and the Chinese Banking Regulatory Commission, as "win-win".

"This would help the operation of Taiwan banks in the mainland and facilitate investments in Taiwan by mainland banks and enterprises," the statement said.

The easing comes more than a year after Taiwan removed a prohibition put in place in 1949.

Taipei and Beijing in 2009 signed a package of agreements on better cooperation in banking, insurance and securities.

Currently six Taiwanese banks have branches in China while four others have opened up liaison offices there. Two Chinese banks have set up branches in Taipei while two others have opened up representative offices.

China still considers Taiwan part of its territory, even though the island has governed itself since 1949 at the end of a civil war.

Ties have improved since Ma Ying-jeou became Taiwan's president in 2008 on a China-friendly platform. He was re-elected in January 2012 for a second and last four-year term.