By George Chen

NEW YORK (Reuters) - Major Chinese banks have looked at buying a stake in CIT Group Inc (CIT.N: Quote, Profile, Research) or forming a partnership with the U.S. commercial lender, but have backed away because of concerns about CIT's ability to finance itself, people familiar with the situation said.

Banks including Industrial and Commercial Bank of China (601398.SS: Quote, Profile, Research)(1398.HK: Quote, Profile, Research) (ICBC) and Bank of China (3988.HK: Quote, Profile, Research)

(601988.SS: Quote, Profile, Research) separately talked to CIT in recent months about a possible equity investment to help the New York-based company boost its capital, or a partnership to help fund its business.

They were looking at CIT in part to learn more about leasing, which is still new to the world's fastest-growing major economy but could be a useful way for small businesses to finance assets, said the sources, who declined to be identified because they were not authorized to speak to the media.

But both turned down CIT, and other Chinese banks are likely to do the same, because of concerns about the company's ability to fund its operations amid the credit crunch.

CIT recently drew down $7.3 billion of credit lines and is looking to sell assets to help finance itself. With a portfolio of more than $80 billion in managed assets, its difficulties could make it harder for small businesses, retailers and others across the United States to finance their operations.

Bond markets, including those for asset-backed securities and unsecured corporate bonds, are increasingly closed to the likes of CIT, which cannot borrow from the Federal Reserve.

Instead of issuing bonds, CIT plans to sell assets outside its main commercial finance businesses and is looking for a business partner to fund loans and leases that it makes.