Sahara India Investment Corporation Ltd (SIICL), part of the Subrata Roy-promoted Sahara group, has voluntarily exited the non-banking financial business and will henceforth restrict its operations to real estate. SIICL and other residual non-banking finance companies have been under the Reserve Bank of India (RBI) scanner for some time.
?SIICL, which is one of the companies belonging to Sahara group, cannot transact the business of non-banking financial institution,? RBI said in a release issued on Friday.
On August 11, the central bank cancelled the company?s certificate of registration for carrying on non-banking financial business under the terms of Section 45-IA (6) of the RBI Act, 1934.
The Sahara group top brass held several meetings recently with RBI officials at the central bank?s Mumbai office in an effort to stave off the cancellation, but with little success. ?The management has decided to carry out real estate business in SIICL,? said a Sahara group statement.
A Sahara group spokesman clarified that SIICL was distinct from Sahara India Financial Corporation Ltd (SIFCL), which is a residuary non-banking company involved in para-banking, or deposit mobilisation. After litigation, RBI has asked SIFCL not to accept new deposits that mature beyond June 30, 2011 and gradually reduce the aggregate liability to zero by June 30, 2015. Sources said that Sahara India Investment Corporation has negligible deposits.
In 2000, RBI had accorded SIICL, along with two other group companies?SIFCL and Sahara India Corporation? with certificates of registration. However, in the past few years, residual non-banking finance companies have been under increasing scrutiny by RBI and it had mandated auditors KPMG to study and analyse the operations of the Lucknow-based group?s operations.