New banking licences to come with tougher norms

The Reserve Bank of India and the government will ensure that the entry of new banks does not skew the line for established banks in the country, financial services secretary R Gopalan told reporters in Mumbai.

He said fresh licences would be issued to only such parties who are ready to operate on a pan-India level rather than as localised banks.

It is likely that non-banking financial companies (NBFCs) like Reliance Capital get to operate as pan-India banks.

RBI is expected to come out with guidelines on new banking licences in about three months.

While the government wants to expand banking facilities in the country, he said, the issue of new banking licences would also make sure that these banks operate on a pan-India basis. He said the RBI and the government are coordinating policy guidelines for entry of new banks so as to ensure that existing banks are not disadvantaged.

"There must be a level playing field for the existing banks also. 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.