Indian Finance Minister Encourages Pan-India Banking Licences

Vanessa Doctor

21 March 2010

The Indian financial services secretary, R Gopalan is keen on creating an all-India licence for new banking entrants, with the condition that existing banks enjoy a level playing field, the Economic Times (of India) reports.

The Reserve Bank is reportedly considering giving bank licences to private sector players for the commercial banking industry given the increasing number of international banks looking to tap the country's rapid growth.

"There must be a level playing field for the existing banks also," Gopalan was quoted as having said at a recent State Bank of India event.

"It should not be a disadvantage to them. The guidelines will be framed in such a way that it will not be disadvantageous to the existing players."

Gopalan said that allowing more players to enter the Indian financial market would help bolster healthy competition and push financial inclusion. Under the proposed licensing scheme, banks would be compelled to go beyond localised operations and, instead, have to operate with a pan-India offering.

"There are many numbers of unbanked villages and the potential for banking in the country is huge," Gopalan added.