P. Chidambaram, the union Finance Minister has said that the government is planning to issue some of the new banking licenses before March of 2014 in the country.

"RBI has released guidelines for licencing of new banks and I hope that some banks will be licenced before the end of the financial year. We need more banks, we need more branches. We need them in the small towns, in the block headquarters, and the backward regions of the country especially the North Eastern states and the hill states," Chidambaram said.

While speaking at the AGM of Indian Banks' Association, he said that the entry of new banks, more number of branches and re spatial distribution of location of banks will encourage financial inclusion in the country by extending access to banking services to more number of Indians across the country.

India's banking sector is highly regulator to protect people's savings and to ensure the stability of the financial system in the country. However, the authorities are now looking at financial inclusion as a significant proportion of the Indian citizens do not have a bank account. The government is not aiming to expand the distribution of financial services in the country by allowing new banks to enter the Indian banking sector.

The Central bank has worked on new rules to issue banking licenses to some parties. These rules are expected to allow firms in other sectors to enter the tightly regulated banking sector of Asia's third largest economy. The banking sector in the country has been traditionally dominated by the state-run banks with private banks like ICICI Bank and HDFC Bank Ltd as well as some foreign banks making in roads and consolidating their positions in the market.