Pune, April 10 (IANS): The Indian banking sector is all set to see a sea change in next two years with several new institutions and existing government banks undergoing a great change, RBI governor Raghuram Rajan said on Friday.

"In next two years the banking sector will see a number of changes. We will have a new institutions like payment banks, small finance banks and a postal bank possibly," said Rajan at the 11th convocation of the National Institute of Bank Management here.

He also said the government-owned banks would also undergo a great change.

The Reserve Bank of India (RBI) has announced the list of applicants for small finance banks and payment banks.

The central bank has received applications for setting up small finance bank and for payment banks.

Rajan said the derivatives market will become vibrant and several new opportunities would arise.

According to Arvind Subramaniam, chief economic advisor, Indian economic growth is higher than that of China.

Subramaniam said availability of skilled manpower is difficult in India but the country is trying to grow and despite this deficiency.

He said India is one of the few growing economies having a democratic governance.