New Delhi: In a major move during the ongoing electoral process in the country, the Election Commission of India is said to have understood and allowed the Reserve Bank of India (RBI) to go ahead with the process of issuing new banking licences.
The apex bank had earlier this month sought the approval of the EC for issuing licences even after the process for issuance of bank licences had begun last year.
However, on Wednesday, RBI sources stated that they had not yet received any clearance from the Election Commission on the issue.
Official sources stated that a consensus has arrived in the Election Commission on giving the go ahead to the apex bank on issuing new bank licenses.
“The directive for the same will be issued any time,” government sources said.
It is learnt that the decision comes days after the RBI governor Raghuram Rajan sought the clearance for issuing new banking licences to ensure that there was no violation of the model code of conduct. In fact, Mr Rajan had on March 7 said, “I think the process has taken place over last one year and it is nothing new. But, certainly, we would want them (EC) to be okay with it.”
The Election Commission had enforced the model code of conduct on March 5 with the announcement of general elections in the country. The proposal for new bank licences, aimed at greater financial inclusion, was mooted in a Budget speech a couple of a years ago.
The apex bank is reportedly processing licences for private banks where a total of 25 companies have applied.
Applicants for the licenses include India’s postal department, India Post, Reliance Capital Ltd, Bajaj Finserv Ltd, Aditya Birla Financial Services group and L&T Finance Holdings Ltd, etc. among others. An expert committee under former RBI governor Bimal Jalan had submitted its final recommendations to the central bank after scrutinising the applications.
RBI had last time given banking licences in 2003-2004, approving Kotak Mahindra Bank Ltd and Yes Bank Ltd. Following the nationalisation of 14 banks in 1969 and six in 1980, the RBI has so far given licences to only 12 banks in two phases.
