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RBI cancels Sahara India Financial Corp's NBFC registration
Highlights
Bringing to closure an over seven-year-old case, Reserve Bank has cancelled Sahara India Financial Corporation\'s certificate of registration as NBFC. \"Following the cancellation of registration certificate, the above company cannot transact business of a non-banking financial institution...\" the RBI said in a statement on September 15.
Bringing to closure an over seven-year-old case, Reserve Bank has cancelled Sahara India Financial Corporation's certificate of registration as NBFC. "Following the cancellation of registration certificate, the above company cannot transact business of a non-banking financial institution..." the RBI said in a statement on September 15.
The registration of the Lucknow-headquartered NBFC stands cancelled with effect from September 3, it added. The NBFC was registered in December 1998. Earlier, markets regulator Sebi had cancelled mutual fund and portfolio management licenses of other firms of the group, which is engaged in a long-running battle with the regulator in a case related to refunds totalling thousands of crores of rupees. Its chief Subrata Roy is in jail since March 4, 2014.
Back in September 2008, a group company Sahara India Investment Corporation Limited had informed the RBI that it has "voluntarily exited non-banking financial business". In another order on June 4, 2008, the RBI had prohibited Sahara India Financial Corporation Ltd (SIFCL) from accepting deposits from the public and had directed SIFCL to repay the depositors on maturity and comply with the directions of the central bank.
Later it approached the courts and the Supreme Court asked the RBI to provide a personal hearing to SIFCL and pass a fresh order. After taking into consideration submissions made by the group, the RBI passed another order directing the company not to accept any new deposit which matures beyond June 30, 2011 and to stop accepting instalments of existing deposit accounts also with effect from that date.
A staggered timeline was also given to the company to reduce its Aggregate Liability to Depositors (ALD) and it was asked to repay the deposits as and when they mature and bring the ALD to zero on or before June 30, 2015.
The RBI incorporated in its order the offer made during the personal hearing by the group, which offered to reconstitute the Board of Directors of SIFCL within a period of 30 days from June 16, 2008 with half of the members as independent directors and to continue that arrangement till the time of entire repayment to all depositors.
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