The Reserve Bank of India (RBI) has prohibited Lucknow-based Sahara India Financial Corporation, a residuary non-banking company, from accepting public deposits from any person in any form whether by way of fresh deposits or renewal of the deposits or otherwise, with immediate effect.
RBI has taken this drastic action after finding that SIFCL had continuously violated directions/guidelines, said a release by RBI on Wednesday.
However SIFCL will be entitled to carry on its other business activities in accordance with law, the central bank said.
Some of the violations committed by Sahara as enlisted RBI are maintenance of directed investments in violation of para 6(1)RNBC (RB) Directions, 1987, payment of minimum rate of interest prescribed under para 5 of RNBC (RB) Directions, 1987, ALM guidelines stipulated in Company Circular 15 dated June 27, 2001, KYC norms stipulated for opening of deposit accounts and the details on the agents of the company deployed for deposit mobilization, intimating depositors in time of maturity of their deposits and repayment of deposits on maturity
However RBI has said SIFCL will repay the deposits as and when they mature.
RBI has further directed that SIFCL will not treat non-payment of instalments under any running daily deposit or other recurring deposit schemes by depositors after the date of this order, as a default by depositor and SIFCL shall be liable to pay the agreed rate of interest on the amounts actually held by it for the entire term of the deposit as if there was no default.
Also the company shall lodge all securities held in its custody with the designated bank for custody .
SIFCL shall strictly comply with the requirements of all the applicable provisions of the RBI Act, the directions, guidelines, instructions and circulars issued by RBI there-under from time to time until such time as all the deposits are repaid with interest in full.
For repaying the depositors, SIFCL shall first apply its income and investments other than the investments it is required to maintain under paragraph 6 of RNBC Directions. SIFCL shall ensure that the investments as directed in paragraph 6 of RNBC Directions are maintained with respect to its aggregate liability to depositors both towards principal and interest.
Also, SIFCL will have to forthwith notify all its agents and employees that it has been prohibited from accepting deposits and will need to paste a copy of the operative portion of the order in a conspicuous place at each of its branches and offices, RBI directed.