Reserve Bank of India (RBI) has barred Sahara India Financial Corporation Ltd (SIFCL) from accepting any more public deposits with immediate effect.
The company has been barred from renewing deposits and has been asked to pay full interest on recurring deposits even if there are defaults.
SIFCL, the flagship of the Sahara India group of companies, is a residuary non-banking finance company (RNBC) whose main business has been to raise deposits from the public. It claims 60 lakh people had invested around Rs 20,000 crore as deposits with it.
Another RNBC, Kolkata-based Peerless General Finance, has been asked to change its business model. By next year, it is moving to a model of distribution of financial products.
In a statement, Sahara’s head of corporate communications, Abhijit Sarkar, said the RBI order “completely ignores the interest of the depositors, and has been passed in a most premeditated and vindictive manner.”
It added that the order was “legally unsound”, and appealed to depositors “not to panic”.
“No inconvenience of any sort would be caused to depositors who shall be reimbursed the full amount upon the maturity of the deposits which have the requisite financial backing,” the statement said.