Mumbai: The government said on 20 March the Reserve Bank will ensure a level playing field for existing banks, while allowing new players in the banking sector who have to operate on a pan-India basis.

“There must be a level playing field for the existing banks also. It (entry of new entities) should not be a disadvantage to them. The guidelines will be framed in a way that it will not be disadvantageous to the existing players,” Financial Services secretary R Gopalan told reporters here.

Announcing the Budget, finance minister Pranab Mukherjee had said that the Reserve Bank will consider giving licences to the private sector players and Non-Banking Finance Companies to foray into the commercial banking space.

Gopalan, who recently took over as the Financial Services secretary, said the government decided to allow more players in the banking space to promote healthy competition in the industry and push financial inclusion.

“There are any number of unbanked villages. The potential for banking in the country is huge. The government wants additional (banking) footprint and has requested the RBI to consider new players. The apex bank thinks there is a need for it,” Gopalan said.

He added that fresh licences would not envisage the parties to set up localised banks, instead they have to operate with a pan-India focus across the country.

RBI deputy governor K C Chakrabarty had earlier said that the apex bank may come out with guidelines on new banking licences in about three months.