Reserve Bank of India said that it favoured granting more licences to banks in a bid to expand financial services to the country's low-earning masses and push into its rural hinterland.
Companies could initially be allowed to take over regional rural banks before being issued a bank licence, the RBI said in a discussion paper.
Creation of new banks, converting non-banking financial companies into banks and allowing large industrial and business houses to enter the banking sector were all options to expand the sector, the paper said.
But new players could see a hike in minimum capital requirements above the current level of Rs 3 billion, it added.
The RBI said it also was considering improving the quality and level of capital and governance of banks as world economies fight back from the effects of the global financial meltdown.
The RBI said it would frame detailed licence applications and invite applications to set up new banks after receiving feedback on the proposals by the end of next month.
India has 27 state-run, 22 private and 34 foreign banks. Another 2,200 rural and co-operative banks cover other parts of the country.
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