(Reuters) - New Zealand will conduct an inquiry to assess competition in the country's banking sector, focusing on services in rural regions, Finance Minister Nicola Willis said on Wednesday.

The decision comes after a draft report in March by the country's competition watchdog said New Zealand's four major banks provided limited competition for personal banking, and that a focus on maintaining profit margins had resulted in under-investment in technology and low levels of innovation.

New Zealand's four largest banks - ANZ Bank New Zealand, ASB Bank, Bank of New Zealand and Westpac New Zealand - are owned by Australia's "Big Four" banks. They make up around 85% of mortgage and other lending, and about 90% of deposits, official data showed.

"Promoting robust competition in the banking sector is vital to rebuilding the economy," Willis said in a statement.

Parliament's finance and expenditure committee will lead the inquiry and work with a committee that focuses on agriculture to determine the scope of the probe and prepare a report on rural banking.

"Growing the rural economy is critical to rebuilding New Zealand's economy and with farmers' satisfaction with banking services dropping in recent years, it's critical we better understand the role of bank competition," Willis said.

The finance committee will hear submissions from banks and may ask the chairpersons and chief executives to appear before the committee, she added.

New Zealand's agricultural sector accounts for 11% of the country's bank loans, according to a central bank report last year.