RBI bars Sahara from accepting deposits
04 Jun 2008
Mumbai: The Reserve Bank of India (RBI) has barred Sahara India Financial Corporation (SIFCL) from accepting deposits from the public with immediate effect, after it found that the residuary non-banking finance company (NBFC) has "continuously violated" its directions and guidelines.
"The Reserve Bank of India has come to the conclusion that the SIFCL had continuously violated directions/guidelines," the central bank said in a statement.
The Lucknow-based Sahara group has been asked to repay the deposits as and when they mature, but allowed it to carry on other business activities as per law.
The Sahara group, owned by industrialist Subroto Roy, has interests in financial services, entertainment, real estate and sports.
RBI also asked Sahara India Financial Corporation to lodge all securities held by it with designated banks and notify all its agents and employees not to accept deposits.
The company had raised deposits from 42.5 million depositors so far.
Last year, Sahara along with Peerless, was asked to stop accepting public deposits by 2010. The two were required to invest 100 per cent of their deposits in approved securities, including government bonds, fixed deposits with banks and mutual funds.
Sahara, Peerless General Finance and Disari India Savings and Credit Corporation – all residuary NBFCs – accounted for over 90 per cent of the Rs22,622 crore deposits mobilised by NBFCs. Sahara's deposits are estimated to be over Rs10,000 crore and it is the biggest of the three residuary NBFCs.