With the Election Commission giving its approval to the Reserve Bank to go ahead with granting new banking licences, industry experts believe the central bank will soon hand out the same to eligible candidates.
Analysts believe the RBI will give licences to only a few aspirants in the current phase. There are 25 applicants in the fray for new bank licences.
In a letter written to RBI Governor Raghuram Rajan, the Election Commission this evening said: "The Commission is of the view that the RBI may take necessary action (for grant of in-principle approval for banking licences) as deemed appropriate."
Ashvin Parekh, former EY partner and currently the promoter of Ashvin Parekh Advisory Services, told PTI that the EC nod shows that issuing banking licence is the prerogative of the RBI and not a political action and therefore it is a very constructive step as it has been in the work for the past three-and-a-half years.
Earlier this week, BJP leader Piyush Goyal had said the RBI should be stopped from issuing licences just a month before a new government is formed.
When asked granting licences will upset Rajan's equation with the new boss at the Finance Ministry, Parekh said he does not think so as the whole process is discussed thoroughly for long and every question in the 168-page draft has been well- documented and is transparent.
PwC India Associate Director for Financial Services Robin Roy said: "All decks are cleared for the RBI to move ahead and announce the names of those who will get the in-principle licence. The next couple of days will be very interesting to watch out for in this context.
Terming the EC's decision as a very positive step, E&Y India Head of Banking and Financial Services Abizer Diwanji said: "As Governor Rajan has said rightly, it is not a political process, but a regulatory process. And the fact that the EC gave the go-ahead only reaffirms what the Governor has said."
The RBI on March 12 approached the Election Commission seeking its approval for granting bank lincences as the model code of conduct had come in place after the general elections announcement on March 5.
