The Reserve Bank of India (RBI) on Wednesday barred Sahara India Financial Corporation from accepting public deposits, saying that the residuary non-banking finance company (NBFC) has "continuously violated" the requisite directions and guidelines. The RBI move will mean that the company can neither accept fresh deposits, nor renew deposits it has raised from 42.5 million depositors.
Residuary NBFCs accept public deposits in the form of daily deposits, recurring deposits and fixed deposits. The segment also covers NBFCs that cannot be classified as equipment leasing, hire purchase, loan, investment, nidhi or chit fund companies, but which access public savings by operating recurring deposit-type schemes.
Last year, along with Peerless, Sahara 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 Rs 22,622 crore deposits mobilised by NBFCs. Sahara's deposits are estimated to be over Rs 10,000 crore and it is the biggest of the three residuary NBFCs.
The maximum deposits for these NBFCs came from central (Rs 18,108 crore) and eastern (Rs 4,514 crore) regions of the country.
After examining Sahara's submissions in response to a show-cause notice from RBI, the regulator decided to put in place the curbs on accepting deposits.
In a statement this evening, RBI said that the violations related to maintenance of directed investments, payment of minimum interest rate, asset-liability management guidelines and know-your-customer (KYC) norms stipulated for opening of deposit accounts and the details on the agents of the company deployed for deposit mobilisation.
Another violation pertained to intimating depositors in time of maturity of their deposits and repayment of deposits on maturity.
When contacted over phone, Vimal Maniyar, deputy manager (corporate communications), Sahara, said that he was travelling and could not share details immediately.
The apex bank, seeking to protect the interests of depositors and in public interest, said that Sahara will have to repay the deposits as and when they mature.
Besides, it said that the company will not treat non-payment of installments under any of its schemes as a default. Sahara has been asked to pay at the agreed rate of interest for the entire term of deposit.
The NBFC has been asked to keep all securities held in its custody with a designated bank for custody.
