The Election Commission on Tuesday gave the green signal to the Reserve Bank of India for ‘in-principle’ grant of licences to set up new banks.

As the model code of conduct is in operation, the RBI had written to the EC on March 12 seeking clarity on the issue.

“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,” EC Principal Secretary K. Ajaya Kumar wrote to RBI Governor Raghuram Rajan.

The RBI earlier planned to issue new bank licences in March after a gap of 10 years. The RBI had received 27 applications initially. Later, Tata Sons and Value Industries withdrew.

Earlier in the day, the RBI Governor, while unveiling the bimonthly monetary policy in Mumbai, said that once the central bank got EC approval, it would expedite the process and grant licences.

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